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Protection Report No. 8 (page2)
GET THE MESSAGE
RICHARD WALSH
LifeSearch and the ABI both have the interests of customers at heart. It is in no-one’s interests for people to buy insurance that does not pay out because of non-disclosure that could have been prevented; and it is in everyone’s interests that valid claims on life and protection policies are paid. LifeSearch has been at the forefront of a campaign to persuade insurers to publish claims data for critical illness insurance. Many firms have done so. This is no bad thing, for it helps to demonstrate the industry’s increasing commitment to openness and clarity. But we all need to exercise great responsibility in how these statistics are used.
For instance, a simple ‘league table’ of firms by declinature rates would be misleading for customers and advisers. People must not be given the impression that any given individual is more likely to be successful with a claim had they bought their policy from a company with a lower declinature rate. As we all know, claims are evaluated individually, and the overall performance of a firm has no bearing on this process.
It is most important to ensure that consumers are given full and clear information at the time of purchase both about what a particular policy does and doesn’t cover, and on what information consumers should provide – for example, past medical history. We agree totally with LifeSearch’s recent message to consumers – ‘if in doubt, write it down’. We hope that advisers too will recognise their responsibilities here, and pass this message on to their clients as appropriate.
For our part, as well as our useful dialogue with LifeSearch and others, we recently announced a series of industry initiatives to improve clarity of information, ensure application forms are better worded and generally to enhance understanding of medical and protection insurance. The industry wants to pay valid claims and we want customers to be better informed and more confident about the insurance they buy. All the work going on in this area should help ensure that fewer claims are declined in the future.
KEVIN CARR
Communication Breakdown. Whether the Scottish Provident case featured on TV and in the newspapers was a one-off or not, the fact that a customer who was genuinely ill had to wait four months for the wrong decision on a claim is simply unacceptable. A close friend recently submitted a genuine critical illness claim to another insurer and they replied on a compliment slip that just said ‘thanks’. While a comp slip is perhaps more personal, there was no guidance on the process, no guidance on the timescale and nothing more was heard for 6 weeks.
Without doubt, our industry needs to improve the communication made to customers around the time of a claim. LifeSearch does this by using the services of Red Arc.
Although LifeSearch has never experienced such a problem first hand, I find it rather depressing that we need to put this issue on record at all. The standard of claims handling must improve if our industry is ever to move forward and establish the trust we need to close the rising £2.4 trillion protection gap. It is wrong that the industry asks customers to prove their claim is genuine before we treat them sensitively, with care and with courtesy.
The industry professionals who are dealing with claimants – making the phone calls and writing the letters – MUST remember (whether or not the claim might be fraudulent) that these people are very, very sick and must not be treated in the same way they would had they claimed for a damaged headlight. The communications must be fair and honest from the start. These claimants are ‘innocent until proven otherwise’.
So what can we do to improve the situation?
- Launch an independent industry-wide ‘grey claims’ panel? But who would fund it, who would be on it and should there really be such a thing as a ‘grey claim’?
- Set basic industry standards on best practice for communication at the time of a claim?
- Carry out more upfront underwriting and increase the premium, or charge a fee accordingly?
- Make use of specialist counselling services such as Red Arc?
- Improve upfront communication and make more information available regarding the claims process and the reasons claims are declined?
Whatever we do the message to consumers must be:
‘If you are fair and honest with us we will be fair and honest with you’. Kevin Carr, Head of Protection Strategy
Experts say people should take claims history with a pinch of salt. The most important thing to take from this issue is to remember to put absolutely everything down on your form. Sunday Telegraph, February 2006. To allay fears about rejected claims, most of the providers have now released details of their payouts, showing that around one in five claims is rejected. However, a closer look shows that 95% of claims are paid where the policy was taken out more than three years ago. The Telegraph, March 2006. Making a claim because you are desperately ill is hardly the same as claiming because you have ruined the carpet. Blindingly obvious that may be, but it seems insurers need to be told. Mail on Sunday, March 2006.
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