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Is the OC unhappy with an insurance claim outcome? Escalate to an IDR!

By Renee Cassidy on

Receiving a Letter of Denial for your client’s insurance claim isn’t a particularly welcome outcome, especially if you feel that the insurance claim should have been covered by the policy. However, take comfort from the fact that a denial letter doesn't have to be the end of the road for your claim...

In most cases, an insurer’s position when denying a claim is well substantiated, with denial letters clearly identifying reason(s) why a claim was declined, generally referring to extracts from their policy wording to support the decision.

However, if you or your clients feel an insurer’s decision lacks valid reasoning, or the claim settlement isn’t sufficient for adequate recovery, Whitbread can escalate the claim to the insurer’s Internal Disputes Resolution (IDR) team for further investigation.

The claims escalation process

Under Australian Law (Corporations Act 2001 – Regulatory Guide 165.1), institutions e.g insurers who are licensed through the Australian Securities & Investments Commission (ASIC), are required to have 2 distinct disputes and complaints resolution processes:

  1. an internal disputes resolution (IDR) process, where the dispute is dealt with by the insurer, and
  2. an external disputes resolution (EDR) scheme where an independent body is consulted to provide impartial advice.

These processes are mandatory, and ensure that any disputes or complaints lodged with an insurer are dealt with in a manner that complies with ASIC standards.

Through our in-house claims team, Whitbread take the lead in managing our clients’ insurance claims, and always strive to obtain the maximum settlement possible. As strata claims specialists, we can handle the IDR process on your client’s behalf for the pursuit of a better outcome when things aren’t resolved as expected.

What does the IDR escalation process involve?

Whitbread take several steps to ascertain on your behalf whether or not a claim should be escalated to an insurer’s IDR team:

  • Further scrutinise the cause of the damage, including proximate causes i.e. related insurable events that may have contributed to the damage
  • Study the policy wording, paying particular attention to policy definitions, conditions and exclusions
  • Review all relevant documentation such as assessor reports, or the claim form
  • Evaluate reasoning for the insurer’s denial
  • Seek further particulars from the claimant where necessary
  • Apply precedent whereby insurers have previously paid claims under similar circumstances.

If after reviewing the above we believe that the claim should be paid, we will seek your consent to submit the claim to the insurer’s IDR team, and manage the dispute on your behalf.

The insurer’s IDR process

Upon receipt of an IDR request, an insurer has a period of 15 business days to advise whether their initial decision on the claim will stand or be overturned. From this point there are two potential outcomes:

  • The insurer agrees to overturn their initial decision, or
  • The insurer maintains their decision to deny the claim.

Should the dispute be resolved in your favour, the insurer will overturn their initial ruling and forward the claim settlement via Whitbread.

However if the insurer still maintains the same ruling, and you are dissatisfied with their reasoning, you can escalate the claim via your insurer’s EDR scheme.

This involves submitting the dispute to the leading independent dispute resolution service, the Financial Ombudsman Service (FOS), who provide free mediation services for claims disputes involving financial institutions.

For more information on the services provided by FOS visit their website:

Please note that as of 01/11/2018, FOS will form part of a new disputes resolution service known as the Australian Financial Complaints Authority (AFCA).

Why would a claim’s original ruling be overturned by an IDR?

IDR proces diagram WIBBy submitting a claim to the IDR process, both the client and insurers have the opportunity to submit further substantiating evidence that may have been omitted at lodgement i.e. condition reports, pre-damage photos. This information may help shed further light as to the cause(s) of the claim, and prove that damage was due to an insurable event.

Situations where an IDR has provided a positive outcome:

a) A ground floor resident of a strata property submitted a claim for water damage due to water seeping through the roof of the bathroom ceiling from the unit upstairs.

  • Initially the insurer denied the claim, as the damage was deemed to be caused by wear and tear on the upstairs unit’s wastewater pipe (not covered under Strata Insurance), and because the damage appeared not to be from a sudden or unforeseen event. It also appeared to have been caused over an extended period.

  • Of the belief that the water damaged ceiling should be repaired regardless, Whitbread put forth the claim to the insurer’s IDR team.

  • While the insurer still declined to provide compensation for the upstairs unit’s broken pipes (as it was specifically excluded from the policy wording), they overturned their decision for the downstairs unit’s damaged ceiling, and provided settlement to pay for repairs.

b) A unit owner and their tenant experienced lengthy delays from both the assessor and insurer when seeking to rectify water damage from a leaking balcony.

  • With the unit practically uninhabitable i.e. lacking access to the kitchen and having no ceiling, the landlord reached an agreement with their tenant to only pay 50% of the monthly rent, and requested the insurer provide payments under their Loss of Rent cover.

  • In their original decision, the insurer had refused to provide payments for Loss of Rent as the premises was still deemed ‘habitable’ under the insurer’s policy wording.

  • Through the IDR process, Whitbread argued that the dwelling was uninhabitable and requested the full Loss of Rent amount be paid to cover the 8 months the dwelling was affected.

  • As the insurer was liable for the lengthy delays, the initial decision was overturned and the unit owner was compensated for Loss of Rent for the full 8 months.

The settlement of insurance claims is a crucial element in our business, and we have built a dedicated claims department to ensure our clients have the best chance of success at claim time. As skilled professionals, we will take the lead in managing your insurance claims, and will always strive to obtain the maximum settlement applicable under the policy.

If you need to lodge a claim, or would like more information on the IDR process, please contact your Whitbread claims consultant:

P: 1300 424 627


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This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

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