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An education in non-disclosure

CBK principal Peter Chadborn on catching the high proportion of unpaid claims

There is much talk about the need to better educate consumers and advisers regarding the issues and implications of non-disclosure. Similarly, the ABI has aided consumer and adviser understanding of critical-illness definitions via its statement of best practice.

This idea is essentially one that the Colchester office of CBK has already partially embarked on and I would therefore like to put it out for discussion to see if there are parts of it that others see merit in.

About 20-25 per cent of claims are currently turned down for non-disclosure. About half of these are turned down due to not meeting policy definitions and half down to various forms on non-disclosure. Therefore, I think that this idea could catch a considerable proportion of the non-disclosure unpaid claims.

• To considerably reduce potential for non-disclosure when several pre-existing medical conditions prevail.

• To avoid the potential for adviser implication if a claim is unsuccessful due to nondisclosure.

In order for improvements to be made, all parties need to take an increased level of responsibility.

Consumer: obtain medical records.

Adviser: separate the advice and the application process.

Insurer: review the medical records at application stage

Step 1:

Adviser makes broad recommendations and potential health issues are identified. Application form (and supporting docs etc) left with clients to read, digest and complete in their own time. Therefore:

• Clients under no pressure to remember medical history on the spot.

• Clients educated re nondisclosure.

• Adviser has not asked the medical questions or comp-leted the application form (unsuccessful claimant cannot allege info disclosed but not recorded by adviser),

• Persistency levels increased.

• TCF-friendly.

Step 2

Via a template letter, provided by the adviser, the client writes to their GP to request a copy of their medical records

Step 3

Completed application form and medical records forwar-ded to the adviser by the client who in turn packages and forwards to the insurer by their preferred method.

The notes section on the application form states “in case one have missed anything…” or “for the avoidance of doubt… my medical records are attached”



• Better understands the contract in which they are entering into because they have had time to read the accompanying literature (ie critical illness definitions)

• Having had sight of their medical records, they may learn something which their GP felt “they may not need to know…” or “they may not understand…”

• Fully understands the importance of full-disclosurel

• Better understands and appreciates the work that the adviser is doing for them


• Has separated the advice and application process and reduced their exposure to potential claims of undue influence at application stage or inefficient advisory processes

• Has better educated clients

• Has improved their protection persistency because (a) client is not likely to go through this process and then cancel the policy because they better understand its value. (b) not likely to replace the cover for a cheaper alternative because of the lengthy application process.

• Demonstrates TCF.


• Cannot claim reckless or inadvertent non-disclosure because they have been provided with all but a medical.

• Has improved their protection persistency because (a) client is not likely to go through this process and cancel the policy because they better understand its value. (b) not likely to replace the cover for a cheaper alternative because of lengthy application process.

• Demonstrates TCF.


• Medical records must be provided under the Medical Reports Act 1988.

• Provided within two weeks.

• Cost minimum £10, maximum £50 depending on number of sheets. This cost should be reimbursed by the insurer as it is considerably less than a GPR cost.

• A couple of questions during the initial fact-find process, once a protection need has been established, should identify when it would be app-ropriate to utilise this approach, that is, “Have you visited your doctor or sought any medical advice in the last five years?” If the answer is yes,

“Can you readily recall all the instances, the date(s), diagnosis, treatment and/or medication and outcome?

If the answer is no, then this approach may be appropriate.

Anticipated objections


Time spent is initially greater but is then saved by the removal of a need for a GPR in most cases.

If there is a need for speedy application process/underwriting due to impending mortgage, then the application can be submitted anyway (paper or online) and medical notes can be sent afterwards (re recent Norwich Union amnesty).


Insurers must put more resource into additional underwriting and will therefore be resistant to this idea. If this puts premiums up, then so be it. An extra few pounds on the cost of protection policies will not be a showstopper.

It is hard to deny that this process will not improve TCF

Business model incompatibility

Many firms will be resistant to this idea because it does not fit their business model. Engaging in the TCF principals does not mean paying lip service to it. It surely means assessing processes, identifying areas for improvement and implementing improved processes.

“Transactional” advisers who sell more than advise will also be resistant due to the perceived extra time and admin added to the sales process. If persistency rates are low, this process should improve them.

Non-return of applications

If application forms are not returned, then this would imply that the consumer has not fully bought into the need and you would therefore have to question the quality of the advice process.

CBK (Colchester) has been “separating the advice and application process” for about 12 months and has seen no reduction in protection take-up.

CBK (Colchester) persist-ency levels remain high.


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