About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, July 19th, 6:10PM
rss
Latest Headlines

Advised sales get more claims paid

If you ever read the comments on articles about insurance in mainstream media, you could be forgiven for thinking that no insurer ever paid a claim.

Thursday, October 13th 2016, 6:00PM 3 Comments

by Russell Hutchinson

The Australian Securities and Investment Commission (ASIC) decided they would conduct their own investigation and see what was happening. In spite of some efforts to make it sound terrible, the level of claims payment is good if a comparison is possible, with, say the UK. What’s more, sales made by advisers tended to have more claims paid than those made direct.

  • Overall 90% of claims are paid
  • Claim decline rates were: 4% for life, 7% for income protection, 14% for trauma, and 16% for TPD

ASIC are worried about the TPD figure. I looked at the income protection figure and thought it was very low for declines. It would be very interesting to see the data for New Zealand. I am worried that our figures won’t look as good – especially for TPD – where some advisers and their staff have told me stories about claims which concern me a great deal. Even more so, because I have TPD insurance.

I hope that our regulators contemplate a similar investigation. But the industry, of course, does not have to wait to be told. In the UK the Association of British Insurers developed common claims reporting standards and encouraged members to release data as a way of boosting confidence in the insurance market. We should do the same. I am willing to bet that showing consumers that we pay claims is a more effective way of growing the market than always nagging potential customers about underinsurance.
There are many causes for disputes about claims, but ASIC’s work lists the main ones. The single largest wasn’t non-disclosure, it was requests for evidence. Perhaps, when ASIC gets around to taking a more detailed look, that will amount to the same thing. The second-most common cause for complaint was delay. Between them these issues accounted for nearly half of all claims problems. Some of them will be fixable. Having ASIC interested probably makes them more fixable. So this is a good review on the part of the regulator.

If you are an adviser, you will like this part of the media release:
“ASIC's review also found that there were higher claims denial rates in relation to insurance policies sold direct to consumers with no financial advice (compared to policies sold through advisers and group insurance policies).”

Customers might ask themselves why. The causes are likely to be several but I suggest fully underwritten cover, broader coverage, and lower premiums (which enable you to buy more) as contributing factors. Advisers can also help reduce those arguments over evidence and expedite the process for you when you experience delays.
 

Tags: Russell Hutchinson

« Are things you never use worth buying?Things we should stop doing »

Special Offers

Comments from our readers

On 14 October 2016 at 11:42 am Referee said:
A timely article, Russell. NZ consumers have a right to this information and it is a monitoring standard our Regulator needs introduce, similar to UK.
As for direct product distribution, upfront underwriting is typically less robust and more will be done at claim time - increasing claim disputes as ASIC has found.
On 18 October 2016 at 4:32 pm Geoff Nairn said:
An analysis of TPD claims may not provide any statistically relevant information because (a) historically, there has been very low market penetration in terms of the volume of TPD product sold; and (b) much of the in force product carries an "Any Occupation" definition which is extremely difficult to get to the stage of Claim Admitted.

Over the last 35 years in the industry, we have had almost as many successful claims admitted for TPD as we have had for Life Cover. Admittedly, in two instances we had to provide extremely strong advocacy on behalf of our client (to the extent that we paid for independent specialist medical reports) to get the Claim Admitted.
On 19 October 2016 at 11:32 am Referee said:
You are correct Geoff - the statistics must drill down the product differences, including the separation of Individual vs. Group.
And yes, strong advocacy and independent reports are often necessary for TPD claims. Also some claims may not be paid because of inadequate knowledge between all parties.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Future actuary rewarded

nib expands First Choice network
nib has announced an expansion of its First Choice network, which the health insurer says has delivered more than $1 million in claims savings in the first year of operation.

Fidelity Life team up for award
Fidelity Life chief technology Officer Dan Wilkinson and his team have been named as a finalist in the Best ICT Team Culture category at the 2019 New Zealand CIO Awards.

Cigna to support kids' mental health
Cigna New Zealand and Life Education have partnered to develop Small Changes Whānau Challenge, a new take-home resource that will support classroom learning about kids’ mental health and wellbeing.

News Bites
Latest Comments
  • Call to ensure efficient advice licensing
    “Thanks Murray. I wonder how many RFA's are considering becoming a sole trader FAP. MBIE is banking on none according to...”
    8 hours ago by MPT Heretic
  • Pathfinder-backed KiwiSaver to target gender diversity
    “This is a great initiative by Pathfinder - congratulations on taking a risk, and standing up for something that you believe...”
    1 day ago by Pragmatic
  • Call to ensure efficient advice licensing
    “@all Put your cheque books away - no need to pay the lawyers to do the research to provide an opinion...... In my old...”
    2 days ago by Murray Weatherston
  • Call to ensure efficient advice licensing
    “Further reading - Kinsington Swan in February 2018 https://www.kensingtonswan.com/news-updates-and-events/financial-advice-reforms-insights-series-14-penalties-enforcement-complaints-and-disciplinary-matters/...”
    2 days ago by all hat, no cattle
  • Call to ensure efficient advice licensing
    “MPT and Murray this might help https://www.fma.govt.nz/assets/Fact-sheets/Who-will-need-a-licence-to-provide-financial-advice...”
    2 days ago by all hat, no cattle
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com