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Better claims data will show the value of protection advice

Emma Thomson

The payment of claims is the key purpose of all of us working within the protection industry; enabling people to receive financial support when tragedy strikes.

Focusing on the outcome at claims stage should underpin all the decisions we make, from product design to providing the right advice, to shaping the claims process itself.

The last few years has seen us become much more transparent when it comes to claims. The publishing of insurer claims statistics has been a hugely positive move forward. It has given advisers data to back up their recommendations.

It has educated them about the value of protection (it was not just consumers who were dubious about payout rates). It has provided knowledge about why the minority of claims are not paid. It has helped to build trust.

Yes, we still have a way to go to improving consumer awareness of our high payout rates, and we know not all insurers measure their claims in exactly the same way. It is not a perfect situation, but what is? The pros hugely outweigh the cons.

Meeting the consumer challenge

With all this in mind, it was astonishing to hear towards the end of last year that some influential people believe we should be less open with our claims payout rates. That they regret the decision to publish by provider, preferring instead to have industry-wide statistics as per the group market. For goodness sake. The group market should follow the individual market, not the other way around.

This opinion seems to be prevalent among reinsurers rather than insurers. Yes, those firms that have no direct interaction with consumers. That is very telling. Reinsurers have a huge impact on the design and price of protection propositions and they should make more effort to understand the needs and opinions of consumers, and indeed intermediaries. The people on the front line of purchasing decisions.

Some reinsurers are now making efforts to engage more with distribution, which is great, but this disappointing episode demonstrates the real need for them to properly understand and focus on the people aspect of our market, not just the technical one.

The point about not always comparing apples with apples is fair but, rather than reduce transparency, let’s try and fix the problem. Let’s understand all the issues and find a means for all insurers to measure claims in the same way. It is something the Protection Distribution Group will be working on.

Overall, much more still needs to be done to improve awareness of claims among intermediaries and consumers. Because, while there are certainly some changes needed to improve the claims experience, there is a lot of great work already being done by these teams. Claims payout data is just one part of the story. And our claims story is one we should be telling.

Emma Thomson is life office relationship director at LifeSearch

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Well said Emma. There is much advisers can learn from reinsurers but this needs to be two-way traffic. Reinsurers need to recognise advisers have a far better understanding of how consumers buying protection really think.

    The best observation I have ever heard on the importance of insurers being transparent on claims stats came for Zurich Global Life CEO Gary Shaughnessy when he said “An insurer not disclosing claim stats is like a fund manager not quoting their past performance”. Reinsurers need to learn this lesson.

  2. Good shout, Emma and Ian. If the brainy leaders of the insurance market were as good on the people aspects as the technical aspects, protection wouldn’t be languishing in the doldrums of mistrust we see today.

    On publishing claims data at firm level, whilst we know there are problems around comparing like with like, and also some fudging of what counts as a “claim”, as Emma says, the new transparency has brought several benefits. A big one has been to increase competition, such that the ratio of declined claims has reduced dramatically since disclosure began. This would not have happened to nearly the same extent if just an industry-wide measurement had applied. Moreover, picking up Ian’s fund manager analogy, for claims performance, disclosure is even more relevant because it’s a demonstrably more reliable guide to the future than fund growth performance.

  3. The issue is and will always be, as you have mentioned, convincing the consumer that these rates are truthful.
    Most still believe insurers will wriggle out of paying for anything and this is what needs to be addressed – not an easy task. I have heard from countless people that insurers are ‘crooks’ and will do all they can to not pay. It is always the negative news that makes the headlines and not the positive parts.

  4. So do I smell a conspiracy here? Alan Lakey in Cover Magazine and Emma here in MM. Is this coincidence of is someone managing this behind the scenes. I am not going to bother repeating myself again. For those interested in my views to the comments on Alan Lakey’s piece in Cover.

    However I will make one additional comment. Emma you say “Focusing on the outcome at claims stage should underpin all the decisions we make, from product design to providing the right advice, to shaping the claims process itself”, so why do you Life Search place the bulk of their business based on price and commission levels. Just saying…

  5. Emma, take the lead for distribution, get Lifesearch to publish your claims stats.

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