In recent weeks it has been great to see most of the income protection insurers who had previously refused to publish their claims statistics decide it was time to do so.
Starting with Zurich in early march, Aegon later that month and Scot Prov/Bright Grey this week, firms have finally realised that, despite the complexities involved, keeping these statistics hidden sends a terrible message to consumers about a bedrock of financial planning.
There is one noticeable exception of course. Friends Life, the biggest player in the income protection market, is now the only insurer refusing to make its IP claims data public.
Its lonely position appears untenable and you would hope the provider sees sense and joins its rivals in making its statistics public.
The failure of many providers to disclose IP claims statistics has been a long-running battle. The Income Protection Taskforce has spent a huge amount of time in recent years looking to persuade insurers that keeping their figures under wraps is no way to run a modern life company.
The concerns of insurers around disclosure are understandable. Some providers have very small books and a couple of extra declined claims for valid reasons can significantly skew the overall annual figures.
There are also complexities around some of the different product features that need to be understood. For example, in the case of group IP, firms’ HP departments are under pressure to notify insurers of potential claims relating to staff absence early on. Where the employee returns to work during the deferment period, which varies between insurers, this can be treated as a declined claim.
But using such excuses shows a complete disregard for the ability of advisers to do their jobs properly and explain the context of the individual firm’s claims stats. Most IP is written through advisers, not by consumers toggling a simple “top ten insurers on IP claims” list on a price comparison site and clicking a couple of buttons.
Advisers are more than capable of explaining this background to clients. Drilling down into the reasons for the declined claim on smaller books should also act as a good educational tool for the client.
For example, in the case of Aegon, one of the insurers who had previously declined to publish IP claims stats due to the size of its book, the insurer now provides the following information:
“In 2012, Aegon had 30 claims for IP in total and paid 25 of them, or 83 per cent. The total benefit paid to the 25 claimants was £367,000. Two claims were declined because they did not meet the definition and three were declined due to non-disclosure.”
If Friends Life is so worried about varying product features such as different deferment periods, it should easily be able to give a further breakdown of declined claims to be highlighted for such reasons alongside the overall figures.
The ABI’s work to create disclosure standards across different insurers should help matters but there is always going to be a degree of complication when making comparisons. The fear of coming out badly against your peers is no excuse for keeping your claims stats hidden.
The “it’s far too complicated for the poor consumer so we’ll just keep things a bit hidden” excuse reminds me of some of the early embarrassing fund group responses to concerns about charging disclosure. Thankfully that debate appears to be moving in the right direction.
For IP, the failure of a number of firms to publish claims data was until recently a dark shadow hanging over the sector but it is now only cast over one firm.
In terms of public and adviser perception, it is surely better to be seen as having a higher percentage of claims declined than most (if that is even the case), and putting these stats into proper context, than to be seen to be hiding these figures away.
Paul McMillan is group editor at Money Marketing – follow him on twitter here