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Kathryn Knowles: Remove the smoke and mirrors from protection claim declines

A common theme in the protection industry is a calling for increased honesty and transparency over claims payouts. I want to flip that on its head a bit though, and say insurers need to be bolder when it comes to publishing their claims statistics – not about what went right, but about what went wrong.

We have all seen the news articles that put our industry to shame; where a technicality of an insurance contract has meant someone going without a payout. The stories make me wince. Those of us in the industry can probably understand why the claim was not paid, but that is not what the public is going to see. They just see the big, bad, money-hungry insurer that rips everyone off.

Insurers often publish statistics stating 98 per cent of claims have been paid. They detail the millions of pounds customers have received, providing fantastic case studies of when a claim has changed someone’s life for the better.

But there is always that niggling feeling: “What about the 2 per cent that were not paid out? Sod’s law says I’ll be one of them. The insurer will use a twist of wording in the contract to weasel out of a claim.”

Insurers need to step up and address this head-on. If claims are being turned down for genuine reasons, then there should be no cause for worry at all.

For example, reason one: non-disclosure. Insurers need to explain what this is. Give an example of a non-disclosure that resulted in a partial payment and give another where someone wilfully non-disclosed and the premiums were refunded instead. People will understand the reasons if they are given the information.

Or reason two: not meeting the definition of a claim. People are going to hold on to the fact that the big, bad insurer has not paid a claim out for cancer. But they are not going to hear that it wasn’t severe enough to meet the definition.

Explain that invasive lung cancer has far more of an impact on somebody’s life than a small skin melanoma.

And then there is reason number three: non-payment of premiums. This has to be the easiest one for an insurer to discuss.

If someone has not paid the premium for their policy, or the policy has lapsed, it’s not going to pay a claim. People will understand that.

I know we shouldn’t dwell on negatives, that we have far more positive stories to share.

But the problem is that negative news stories are what is remembered, and we cannot simply ignore them and hope people forget.

We need insurers to be brave and own the negative stories. We need to demonstrate that they look for reasons to pay claims, not for reasons to decline. We need to build trust that declined claims are fair and, if we cannot do that, then you really have to ask whether the insurer did the right thing.

Kathryn Knowles is managing director of Cura Financial Services

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