Insurance Law Association of Singapore Blog, 23 September 2021
In this article co-authored by FIDReC CEO Eunice Chua and Assistant Director Kenneth Har, the authors describe the role and services offered by FIDReC in the context of both life and general insurance disputes.
Singapore is a world-class financial centre. Yet the present-day consumer often faces difficulties with their financial products or transactions. Hence the crucial need for a platform that can effectively handle and resolve retail financial disputes affordably and effectively.
The Financial Industry Disputes Resolution Centre (FIDReC) was established in August 2005, and it subsumed the work carried out by the Consumer Mediation Unit (CMU) of the Association of Banks in Singapore (ABS) and the Insurance Dispute Resolution Organisation (IDRO). FIDReC became a one-stop centre for the resolution of all consumer retail disputes with financial institutions in Singapore. Under the Monetary Authority of Singapore (Disputes Resolution Schemes) Regulations 2007, the financial institutions that must subscribe to FIDReC include banks, finance companies, life insurers, general insurers, capital markets services licensees, licensed financial advisers, and insurance brokers.[1]
FIDReC’s mission is to provide an affordable, alternative dispute resolution scheme that is independent and impartial, to encourage and assist in the resolution of disputes between consumers and financial institutions in an amicable and fair manner. Its services are only available to consumers who are individuals or sole proprietors. All parties must represent themselves and are not allowed to engage external lawyers to represent them at FIDReC.
FIDReC’s Dispute Resolution Scheme
FIDReC offers two schemes: (a) the FIDReC Non-Injury Motor Accident Scheme ("FIDReC NIMA Scheme"); and (b) the FIDReC Dispute Resolution Scheme. The FIDReC NIMA Scheme applies to third party motor accident claims where no bodily injury was suffered, and the claim amount involved is below $3,000. The FIDReC Dispute Resolution Scheme applies to all other disputes at FIDReC. [2]
Both schemes consist of two stages: (a) mediation; and (b) adjudication.
Both schemes consist of two stages: (a) mediation; and (b) adjudication.
Mediation is first conducted to encourage the disputing parties to resolve the dispute amicably. Mediation discussions may take place with both parties jointly and separately. Depending on the complexity of the dispute and the communication preferences of the parties, the discussions may be through the telephone, email, videoconference, or face-to-face meeting. Mediation is free for the consumer and S$50 (excluding GST) per claim for financial institutions. FIDReC’s case managers are equipped with the necessary knowledge and experience to effectively facilitate the mediation of financial disputes. Both FIDReC's mediation services and case managers are accredited by the Singapore International Mediation Institute.[3] FIDReC case managers are able to conduct mediations in English and Mandarin. However, in cases where the consumer is unable to speak English, we strongly encourage the consumer to appoint a nominee to help them.
If no resolution can be reached at mediation, the option of adjudication is offered to the consumer. Should the consumer decide to proceed with the adjudication process, FIDReC will appoint a neutral and independent adjudicator from its panel of Adjudicators. The adjudication process usually involves both parties preparing written submissions for the Adjudicator. There is then an adjudication hearing where the parties present their cases and have a chance to ask questions of each other. For the FIDReC Dispute Resolution Scheme, there is a nominal adjudication fee of S$50 (excluding GST) per claim for consumers and S$500 (excluding GST) per claim for financial institutions.[4] For the FIDReC NIMA Scheme, there is an adjudication fee of S$250 (excluding GST) per claim for consumers and S$500 (excluding GST) per claim for financial institutions. A sum of $200 may be refunded to either the consumer or the insurer after the case is adjudicated. This will be determined by the Adjudicator based on FIDReC’s prevailing Refund Rules.[5]
FIDReC’s Adjudicators comprise highly qualified and credible professionals with many being former judges, and senior lawyers and retired industry professionals.[6] The Adjudicator’s jurisdiction is limited to making monetary awards up to S$100,000 per claim.[7] The Adjudication process is conducted only in English. Consumers who are not fluent in English may appoint a nominee to help them.
A unique aspect of FIDReC’s adjudication process is that the Adjudicator’s decision is only binding on the financial institution but not on the consumer. In this regard, in the event the Adjudicator does not rule in their favour or if they do not accept the Adjudicator’s award, consumers are free to continue to pursue their dispute outside of FIDReC. Both mediation and adjudication at FIDReC are confidential and Without Prejudice, meaning the matters discussed during either process cannot be used in court proceedings.
Insurance Disputes in FIDReC
From July 2019 to June 2020, FIDReC handled 559 claims made against insurers (comprising life insurers, general insurers, and composite insurers) and this made up 47.37% of the total claims handled by FIDReC. [8] From July 2020 to June 2021, FIDReC handled 412 claims (or 38.40% of total claims) against insurers, as a result of reduced claims against traditional life insurance (with-profit) policies and fewer travel and motor insurance claims during the COVID-19 pandemic.
Most of the claims against life insurers at FIDReC pertain to market conduct issues, i.e., inappropriate advice, misrepresentation and inadequate disclosure, and disputes on liability.
· The product groups most complained about for life insurance are traditional life insurance (with-profit) policies, accident and health insurance and investment linked products. Insurers operating these lines of business often see complaints in relation to mis-selling or misrepresentation of the product sold to the consumer.
· General insurers, on the other hand, most often face claims concerning disputes on liability. The product groups most complained about are travel insurance, motor insurance, and accident and health insurance. Complainants are typically individuals that are customers of the general insurers although FIDReC can also handle third party claims arising from motor accidents or public liability policy disputes.
Liability disputes
· The product groups most complained about for life insurance are traditional life insurance (with-profit) policies, accident and health insurance and investment linked products. Insurers operating these lines of business often see complaints in relation to mis-selling or misrepresentation of the product sold to the consumer.
· General insurers, on the other hand, most often face claims concerning disputes on liability. The product groups most complained about are travel insurance, motor insurance, and accident and health insurance. Complainants are typically individuals that are customers of the general insurers although FIDReC can also handle third party claims arising from motor accidents or public liability policy disputes.
Liability disputes
The bulk of retail insurance disputes involve the issue of an insurer’s liability under its insurance contract. Whether it be a claim for medical expenses, damage to a motor vehicle or compensation for a flight delay, disagreements often follow when the insurer rejects the claim. A common type of liability dispute involves the rejection of hospital and surgical reimbursement claims from policies such as integrated shield plans. These types of claims often tend to be of a large quantum and the insureds in these situations could be in dire conditions, both financially and physically. They may be angry, stressed, and emotional that their claims have been rejected.[9]
During FIDReC’s mediation process, we would often have to manage the emotions and expectations of the parties, assess the facts of the case, and look carefully at the insurer’s reasons for rejecting the consumer’s claim. We usually engage both the consumer and the insurer to better understand their respective positions on the dispute as well as the reasons and needs underlying those positions. From there, we would facilitate the discussion between the insurer and consumer and explore whether there are any gaps in the insurer’s assessment of the claim.
Mediation at FIDReC may reveal new information to the insurer and allow the insurer to relook their claim decision. As mediation discussions can take place directly between the consumer and the insurer’s claims department[10] with FIDReC steering the conversation, all parties can share information easily and have questions important to them addressed. For example, after speaking with the Complainant, the insurer may realise that it had failed to consider a particular material fact during its claim assessment. In such an instance, the insurer might then need the insured to produce a medical report that specifically addresses a point in contention so that they can re-assess the claim. Appreciating this, the FIDReC case manager would allow the insurer to share its concerns and explain why such a medical report is needed. The FIDReC case manager may also encourage the insured to obtain the necessary for reassessment of the claim.
There may also be situations where the insurer chooses to make a goodwill offer to the insured. The FIDReC case manager will explore this and other possible solutions to the dispute with all the parties.
In the event there is no settlement at mediation, the FIDReC case manager will offer the consumer the option to refer the matter to adjudication and help the consumer weigh out the pros and cons of so doing. It is quite common at FIDReC that despite there being no settlement, the consumer nevertheless chooses not to proceed further because they have gained a better understanding of the merits of their case through mediation. Such is the benefit of the mediation process.
However, should a claim proceed to adjudication, the Adjudicator will then evaluate the submissions and evidence, before coming to a decision on whether the consumer should be given any compensation. This will include reviewing the insurance contract as well as the medical evidence that is available. The decision of the Adjudicator will then be read to the parties by the case manager on a separate occasion, bringing an end to the FIDReC process.
Market conduct disputes
Market conduct disputes
Unlike disputes on liability, claims involving allegations of market conduct may require different handling by the FIDReC case manager. At FIDReC, market conduct allegations in insurance disputes usually involve issues such as misrepresentation during the insurance sales process or allegations of inappropriate or unsuitable recommendations of insurance products.
These cases often call for a scrutiny of the sales process and usually, at mediation, we will direct insurers to investigate the consumer’s allegations. This will involve the insurer speaking with their sales representative and obtaining a statement of account of the sales process. There will also be a thorough review of the sales documents. Nevertheless, it is usually inevitable that the insurer and consumer do not agree on important facts.
When mediating such cases, FIDReC often endeavours to explore creative options to reach a resolution for the parties. In the case where a consumer is dissatisfied with an insurance policy that had been recommended to him, we usually try to find out what he had originally intended to purchase and then explore with the insurer whether they would be able to modify the existing disputed policy such that the consumer is left with something close (or closer) to what he had intended to purchase. In this way, the business relationship between the consumer and the insurer may be preserved.
As explained in the context of liability disputes, the FIDReC case manager also uses the mediation to help parties understand each other’s perspectives and consider their alternatives. Should there be no settlement, the consumer will have the option of referring his case for adjudication. At the adjudication hearing for such types of disputes, it is common for the insurer to procure the attendance of their sales representative to give their testimony and for there to be questions asked of the consumer and the sales representative so that the Adjudicator can decide on whose account was more probable. The Adjudicator will also review the available evidence (including documentation of the sales process) and decide whether there had been any misrepresentation or whether the recommendation of the policy was in accordance with the Financial Advisors Act (Cap. 110).
In Conclusion
Given the wide variety of products and varying levels of complexity that are involved with insurance disputes, there is no one-size-fits-all solution in the handling or resolution of these disputes.
Nevertheless, for each case we handle, regardless of its nature or complexity, FIDReC endeavours to work closely with both the consumer and insurers to understand the heart of their disputes, the challenges facing the parties, and in so doing uphold its aim of promoting amicable discussion and resolution of financial disputes in Singapore.
[1] “Overview & Background”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/about.
[2] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, pp 7 & 8.
[3] “FIDReC Accreditation of Mediators (specialised in financial disputes)”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/knowledgebase/category/?id=CAT-01012.
[4] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 7.
[5] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 8.
[6] “Adjudicators”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/adlist/.
[7] FIDReC TOR Version 1.9, Section 5, Rule 29.
[8] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 19.
[9] FIDReC’s Contact Centre team and case managers have undergone on-the-job training and are experienced in dealing with distressed persons.
[10] There is no requirement for particular staff from the insurer to participate in the mediation. FIDReC will share with the insurer the issues that need to be addressed so that the insurer can select the appropriate staff to participate in the mediation. We observe that insurers often send their service quality or customer service department staff but may at times also send staff from the claims, underwriting or compliance department. There may also be instances where the broker or agent is involved in the mediation (with the agreement of all parties).
[1] “Overview & Background”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/about.
[2] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, pp 7 & 8.
[3] “FIDReC Accreditation of Mediators (specialised in financial disputes)”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/knowledgebase/category/?id=CAT-01012.
[4] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 7.
[5] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 8.
[6] “Adjudicators”, FIDReC website, Aug 10, 2021, https://www.fidrec.com.sg/adlist/.
[7] FIDReC TOR Version 1.9, Section 5, Rule 29.
[8] “Reaching Up and Out”, FIDReC Annual Report 2019/2020, p 19.
[9] FIDReC’s Contact Centre team and case managers have undergone on-the-job training and are experienced in dealing with distressed persons.
[10] There is no requirement for particular staff from the insurer to participate in the mediation. FIDReC will share with the insurer the issues that need to be addressed so that the insurer can select the appropriate staff to participate in the mediation. We observe that insurers often send their service quality or customer service department staff but may at times also send staff from the claims, underwriting or compliance department. There may also be instances where the broker or agent is involved in the mediation (with the agreement of all parties).