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The question of yes/no questions

Removing yes/no questions from insurance application forms could help reduce non-disclosure, says Financial Ombudsman Service ombudsman Melissa Collett.

In a joint Money Marketing interview with Association of British Insurers assistant director of health and protection Nick Kirwan, Collett says that while the Financial Ombudsman Service has seen an improvement in the structure of insurance application forms, tick boxes still tend to encourage consumers to non-disclose.

She says: “I have always felt that when people are faced with lots of yes/no questions they are encouraged to answer no. If that box was left open instead and you had to explain, there would be more scope for them to explain in their own words.”

But Kirwan says there would be “big implications” for insurers in moving to this model.

Collett says tele-underwriting is the key in helping keep non-disclosure to a minimum.

She says: “With tele-underwriting there is a dialogue and exchange between a medically trained person or professional and consumer. That dialogue is recorded so there is no room for disputes associated with online or paper applications later.

“Tele-underwriting will reduce the risks associated with question/answer tick boxes.”

Kirwan says: “The industry has moved towards autom-ated electronic underwriting but, of course, one thing computers are not doing is analysing detailed alternative answers to yes/no. We haven’t got rid of yes/no questions and again, there are big implications for the industry in doing that.”

On the issue of publishing claims statistics, Kirwan says they should only be released if they “inform” or “empower” the consumer.

He says statistics should only be published if they are produced on a “like for like basis” and avoid “misinforming” the consumer.

Kirwan says: “If we are to publish claims statistics, particularly declining claims statistics, we should only do that if they inform and empower consumers to make better decisions. There are real risks if you are publishing inf- ormation that is not on a like for like basis, which actually misinforms the consumer.

“There are huge debates about what is a claim and what isn’t, income protection, for example. And, it’s very difficult because people capture the information in different ways. Whether we should understand it and use it to inform our work is one thing. Whether we should publish it is a different question.”

However, Collett says all these hurdles are secondary.

She says: “All these things can be overcome. The positive thing about claims stats being published is that we have seen a decline in the number of claims being rejected.”

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