Lies, Damn Lies, and Statistics...
Transparency in Statistics on Critical Illness. It has recently been reported that four in five critical illness claims are paid out. These statistics are now available because about 18 months ago, LifeSearch campaigned for providers to produce figures on their claims that were paid and declined. Since then, about 10 of the leading providers have published their statistics. As the trade body for IFAs, we are pleased that these statistics on claims are now available and would encourage those who have not ‘gone public’ to do so as soon as possible. But whilst transparency of claims statistics is useful, published alone they may not tell the whole story. Without further analysis or qualification, the statistics could give a false impression unless more information is provided.
When recommending a provider to clients, a key factor must be how swiftly and efficiently claims are dealt with when they are presented. For people who are seriously ill and in need of financial support, the timeliness of the receipt of their claim is paramount. So it would be useful to know, when considering statistics on the proportions of claims paid, within what time frame these were made.
When it comes to figures on non-payment of claims, it is essential to have some idea of the reasons why claims were not paid. Where claimants have purposefully provided false information then obviously the provider is within its rights to reject the claim. But the majority of claims turned down are more likely to be for a genuine oversight on the part of consumers. Failure to disclose relevant information at the application stage could be highlighting a problem with the provider’s proposal form, or a weakness in the advisory process. It is obviously important to get this right. About two years ago we produced a check list for our members – ‘Avoiding non-disclosure’. As we know, non-disclosure causes consumers disillusionment and it costs our industry a lot of money.
Insurers and IFAs both have a role to play here. Providers’ proposal forms must be as clear and as unambiguous as possible. Advisers should help clients to complete the form and then check through it for accuracy. Our guidance for AIFA members suggests that at every stage advisers need to remind clients that if they think something is relevant, they should be encouraged to include it. We also advise IFAs to impress upon the client that if there are any changes to their health after they have completed the form but before the policy goes on risk, they must tell the insurer.
It also needs to be made crystal clear to the consumer what is covered and what is not covered by the policy. At the end of the advisory process clients should not be harbouring any unrealistic expectations about the circumstances under which they will be able to make a claim.
Advisers should also encourage clients to contact them direct, rather than the provider, when they believe that they have grounds to make a claim. This is because the IFA is in a good position to act as a filter for spurious or inappropriate claims and this means there is less chance of falsely inflating the ‘non-paid claims’ statistics.
Increased transparency surrounding the reasons why some claims are paid and others are not would be welcome. A published table of statistics on paid and non-paid claims for critical illness, with some details about the ‘whys and wherefores’, would be a useful addition to the information available to help IFAs. It could also help the industry iron out some of the problems which are causing non payment.
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