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Robert Morrison: Improve confidence in CI by explaining unpaid claims

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If there has ever been a particular challenge all insurers would like to overcome, I might hazard a guess it would be around consumer confidence.

Sadly there is still a view from too many members of the public that insurers do not want to pay claims and will do anything they can to wriggle out of them.

I know I speak for all insurers when I say that nothing can be further from the truth. We genuinely want to pay claims. We want to help customers in their hour of need – it’s absolutely what we are here for.

This issue of trust has been a particularly ‘hard chestnut’ in the field of critical illness cover. Given that those suffering from a critical illness will be experiencing an hour of need in the truest sense, this is a time when we really do want to pay out – perhaps more so than ever.

Much work has been done over the last decade to improve consumer perceptions around critical illness cover. Up to now a lot of this attention has centred around insurers releasing statistics of claims paid.

The recently produced ABI statistics show that as an overall industry we are paying the biggest proportion of claims ever. Ninety-five per cent of all life and critical illness claims are paid – this is a huge step away from the 80 per cent we were seeing less than 10 years ago.

I would like to see the protection industry better engage with our consumers and talk about the reasons we don’t pay claims as well as when we do – therefore showing that we aren’t trawling for reasons to decline claims as many consumers believe.

Isn’t the real issue that we want to treat customers fairly, but in doing this we simply cannot – and should not – pay all claims? And we want consumers to understand why we do this for them to agree that it is right and fair.

Rather than focusing on how many we have paid, might we instead focus on the percentage of claims where we have made the correct decision – whether this be to pay or to decline?

Let’s not forget that as an industry, those of us who are members of the Association of British Insurers (which is almost every insurer within the UK) apply a code of practice that is designed specifically to ensure the fair treatment of customers when assessing claims.

We also need to include in our thinking the very recent changes to modernise insurance contract law (Consumer Insurance (Disclosure and Representations) Act 2012). This process included consultation with consumer groups, brokers, lawyers and insurers. All of these parties agreed that in certain circumstances insurers cannot pay every claim.

The Financial Ombudsman Service also provides independent arbitration and can measure how well we succeed at this task. At Aviva the percentage of claims where the FOS has disagreed with our decision relative to the number of claims is 0.06 per cent. This shows that although insurers do decline, we are making the correct decision in the vast majority of cases. And where we don’t, we quickly rectify the situation.

With these thoughts in mind, is our continued pursuit of ever-increasing pay rates and inconsistent comparisons (as documented recently within a popular protection publication), really what we should be focusing on? I think not.

It is clear we have all the requirements in place that ensures customers are treated fairly. So let’s start talking more about those few cases we don’t pay and why, and stop beating ourselves up about half a per cent here and there that might or might not see us be first, fifth or seventh in a table of numbers.

Robert Morrison is chief underwriter at Aviva

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