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Alan Lakey: Shooting from the IP

Is it really so difficult to solve income protection disclosure?

Recently we have seen a clamour for providers to release their claims figures for income protection. Zurich, Bright Grey, Scottish Provident and Aegon have all come forward with figures for the first time and pressure is growing on Friends Life, the one major provider that has yet to commit to this.

There seems little excuse for Friends because its back book of claims relating to Axa, Bupa and, in particular, Friends Provident is mature and, one presumes, fairly substantial. Refusing to release its figures also builds suspicion that it is because they are below average.

From Friends and others’ perspective there is a rationale for not issuing statistics that might mislead the industry and cause unnecessary concern among consumers. This relates to basic questions that have yet to enjoy any substantive consensual agreement, such as what exactly is a claim and what exactly is a rejection?

If a claimant returns to work within their period of deferment, is this a successful claim, a rejected claim or a non-claim?

Currently, each provider is free to adjust its figures according to the view it takes.

Other arguments relate to friendly societies appearing better due to their day-one claims being less likely to result in declined claims.

I would imagine this issue could easily be resolved but it has so far proved impossible.

This, once again, is where the industry has an expectation that the ABI achieves consensus in much the same way that it formed the critical illness working party to resolve the problem of confusing claims wordings.

The ABI has shown little interest as of yet, devoting its energies to pursuing other issues, such as “simple products”. Maybe the protection trade body will bring clarity.

One area that must be addressed is the failure of those insurers administering legacy products to release claims data. Perhaps the ABI can assist here.

The real area of interest will relate to what definition wordings create rejected claims. The useless “any occupation” and the unsavoury “activities of daily work” wordings are likely to create most of these, which is perhaps why friendly societies’ figures always look outstanding.

Below are a few of the questions that flummox some. 

  Question Answer

If a claimant returns to work within period of deferment

A claim or rejection


If a previous claimant claims for the same condition

A new or existing claim

Existing if within 13 weeks of previous sickness

If a claimant has a split deferred period and returns to work before the second payment

A claim or rejection

Neither – it’s already counted as a clima

As Paul McMillan succinctly pointed out in a recent editorial, there is no excuse for not providing claims statistics as long as all insurers provide sufficient information to contextualise it and enable advisers and consumers to better understand.

Here is a grid that would appear to meet these requirements.

  TotalClaims 1-4 week deferred 8-26 week deferred 26 week+ deferred Total rejections Reason for rejections
Company A 72 17/17 29/34 19/21 7 3 non-disclosure
4 not meeting definition
Company B 116 08/10/13 49/59 40/47 19 14 non disclosure
5 not meeting definition
Company C 395 17/18 198/220 126/157 54 17 non-disclosure
32 not meeting definition
5 not proving income

Alan Lakey is director of CIExpert


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Andrew Wilkinson 26th April 2013 at 9:17 am

    On a presales enquiry this week I was told the client would be offered cover on a ‘suited occupation’ basis, so I asked for examples of suited occupations. The enquiry was passed to the claims department who answered that it was impossible to provide any examples of suited occupations. How could a customer or an adviser feel any confidence whatsoever in such a product?

  2. Dermot Brannigan 26th April 2013 at 11:19 am

    @andrewwilkinson It’s quite simple, Andrew. Suited occupation depends on a claimant’s previous work experience, qualifications etc. Surely it’s a better definition than ‘any occupation’ which could be open to all sorts of issues. Not sure why that one point blows the whole product out of the water for you, but there you go.

    Good article, by the way Alan

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