Mustafa Nazlıer / The Hayatımız Sigortalı Magazine
We will change… Relentlessly, renewed, engaged and brave. However, we should essentially not ignore ethics, morals and laws while carrying out these actions. Change and development are absolutely necessary for competition. Even though it has become optional to consider ethics and morals while competing in this day and age, acting in accordance with the law is not a choice, but an obligation. Observing the last 5 years, the unjustified increase in loss costs stands out as the most important problem of the sector’s loss. Unjustified and excessively exorbitant loss costs paid purely because the reinsurers are bearing said costs create different effects. Earning income from the losses is considered reasonable only for the parties who are involved in the recovery of the said losses. The desire of other parties to be involved in the process is not only illegal, but also unjustified.
Insider Trading
Using information for illegal benefit is a crime. One of the most important problems of the sector is spreading rapidly, making an organization for profit by obtaining the information that would grant an advantage. The factor that causes permanent hurdles by dealing the biggest damage to the sector with each passing day and furthers said issues is Insider Trading. The insurance industry is the victim of insider trading. I would like to fill in the details about only one stage in the loss management part of a subject that can be carefully examined in many aspects:
Insurance activities can be practiced within the scope of the Insurance Law No. 5684 in Turkey. Anything not in the scope of the law is illegal; criminal offense. Insurance is universal and takes shape in accordance with the laws of the country while being localized. Nevertheless, the following questions seem to be in need of joint supervision and solution of all industry stakeholders.
One wonders if those who have been in the industry for a long time as an issue that has been gnawing at the industry without considering the law while they have no place in the law in our country, making the losses an income channel, fueling the insider trading, causing the biggest items of damages to the industry, turning information into organized crime and calling it Loss Assessor do actually know and use this term correctly?
One wonders how many people are actually aware of the damage caused by the effort to activate this structure, which is a profession and a part of a different party of the sector abroad, without the necessary legal regulation in our country. More importantly, can the self-confidence created by the lack of control be a factor in the uncontrollable situation that has become permanent?
Such phenomena should never be confused with “Claims Handling”. If there is a need in the sector, there will definitely be consultants on damage issues, and there should be. In fact, they contribute to the performance of legal and correct processes by closing a gap in the sector. Of course, there is no problem in acting as an intermediary in the implementation of laws by paying taxes as a real or legal person as a consultant.
However, when this activity is executed by one of the sector actors, it will become a crime. Namely, this activity cannot be performed by a broker, agent or any of the parties included in the scope of Law No. 5684. It is considered a crime. The processes performed by ignoring the clear provisions of the law, ignoring the SEDDK (Insurance and Private Pension Regulatory and Supervisory Authority) and other institutions, and using the claims handling title constitute more than one illegality and crime. This is how Insider Trading is embodied in the insurance industry.
Brokers and Insurance Agents cannot provide claims advice
When the sector starts performing this work with a party within itself, the crime has taken place. In cannot be called innovation, development or change. Seller’s agents, brokers and agents cannot provide claims advice. They have to offer free service to only to their own insured since they receive their premium. Apart from the fact that they have to provide services for their own product without any fee, it is a crime to provide claims consultancy services to the product by another intermediary not only under the Law No. 5684 but also in terms of many laws, including the competition law.
The number of those who receive commission from claims processes has been increasing for a long time. Its cost is extremely high. Now, almost every loss has started to be seen as an income channel. The frenzied race for compensation in the motor sector has spread beyond its boundaries. The numbers are much higher outside of motor sector. It is one of the most important factors in the real loss of the sector.
This situation is riveted with the concepts of my adjuster, my assistant firm, my mechanic etc. Irregularity in the insurance sector can never be committed by one party. It definitely needs a stakeholder in the sector. Knowing all this, every discerning person finds themselves asking the question; “Are we heading towards an industry that robs itself and feeds on itself?”
When the subject is approached only as gain and loss; since all claims are covered by a reinsurer, submitting facelifted files to reinsurers who are not in the claims management process may be beneficial in the short term. All parties, including the insured, bear this loss in the medium term. With so many parties taking on the loss, apart from the one gaining an unfair advantage, the unobtrusive situation will inevitably become a source of obvious problems in the short run. Apart from the loss of the sector, why shouldn’t the circulation attraction of the tax-free earnings increase the number of participants?
Who is Loss Assessor? What do they do, how do they do it? Only a part of it will be understood after reading this. Located in United Kingdom and providing services in the fields of insurance, risk management and financial services, Alan Boswell Group (Independent Insurance Brokers & Financial Planners) explains the difference between a Loss Assessor and a Loss Adjuster on their website as follows. (You can access the original page via the link below.)
www.alanboswell.com/loss-adjuster-vs-loss-assessor
“What is a Loss Assessor?
A loss assessor works on your behalf and will manage the claim process for you. Their goal is to try and ensure you get the best possible outcome. Your insurer will not appoint a loss assessor for you, it is up to you to find an employ the services of one if you want to. In most cases, loss assessors will manage all the practical details relating to your claim. This could include:
- Dealing with all the paperwork relating to your claim;
- Making sure your property is secured after a break-in;
- Organizing alternative accommodation for you if your home is unhabitable;
- Meeting with your insurer and their representatives (such as a loss adjuster) on your behalf.
If your claim is in relation to your business, your loss assessor will also usually help source temporary commercial premises or office space so that you can stay operational. They can also resolve urgent issues such as liability and secure funds for essentials such as stock and equipment.
Why use a Loss Assessor?
Loss assessors can help you navigate a complex insurance claim where you may not be able to assess the value of the claim yourself. For example, if your home was destroyed by a fire or suffered extensive damage caused by a flood it would be hard for you to know exactly how much you will need to restore the property and whether the settlement figure offered by the insurer is fair. In these instances, your loss assessor can take away the additional burden of dealing with the insurance claim while you come to terms with what’s happened.
Ultimately, loss assessors are experts at what they do. They’re qualified and trained to negotiate on your behalf and effectively present your claim to ensure you get the maximum amount of compensation. Their experience in dealing with insurers, loss adjusters and policy wordings can be vital when trying to get the maximum amount possible from your insurer.
When should you hire a Loss Assessor?
As a general rule, you should hire a loss assessor right at the very start of the claims process or as soon as you realise that your claim is likely to be of high value. Similarly, if you think your claim might be complex it’s worth considering a loss assessor. You can of course employ a loss assessor at any point of the claims process but for the most favourable outcome, it’s best if they see the claim through from the very start.
How much does a Loss Assessor cost?
Loss assessors usually take a percentage of your final compensation pay out. The amount will vary but it’s often around 10%. Some loss assessors won’t charge for their services directly but instead, you’ll have to agree to use services and firms they recommend (for example, builders). The loss assessor will then take commission from them.
Always double check which payment model is being used and make sure you’re happy with the expectation.”
The service defined in the explanations above is an activity carried out in different countries and cannot be applied in our country. It has no place in our current laws. In Turkey, in addition to the Law No. 5684, General and Special Conditions of Insurance have explained how and by whom the damage assessment can be made. The articles of the Turkish Commercial Code between 1401 and 1520 are essential. There will definitely be loss consultancy firms. It is quite normal unless you are an active member of the sector.
There are many interrelated links on the subject. It will not be surprising if this important, serious problem, which is now noticed by reinsurers, will get ahead of the fraud issue in 2022 and the insurance industry will face this situation. I will continue explaining in the coming days to support this article.
Reinsurers are looking into the issue. The whole industry will respond with the domino effect. We will witness legal actions being taken.
Even though it was written for love, Özdemir Asaf’s “What if, one day, they say everyone to their own garden…Are you ready?” poetry looks elegant with this subject as well.
Wishing for a healthy, happy and peaceful year.
Turkish version:
Hayatımız Sigortalı Magazine / February, 2022
