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The tale of two claims - The media's perception of insurance

Two claims stories caught my eye recently that illustrate a media view of insurance - with the honourable exception of this site and some other specialist industry media.

Tuesday, June 15th 2021, 10:25AM 1 Comment

by Russell Hutchinson

The first is a story of a widow who won a battle with a car insurer, but it was for a death benefit included in the cover package.

The claimant’s husband died of a complication from deep vein thrombosis and the insurer declined the claim based on a medical condition that meant he had a heightened risk of developing DVT.

The debate was over whether a ‘heightened risk’ is equivalent to ‘a pre-existing condition’ which was excluded.

The widow had her case highlighted in the media by Stuff.co.nz. The insurer paid.

This underlines two significant problems for insurers. One is the use of pre-existing conditions exclusions in simple consumer contracts such as these, and how the boundaries between a pre-existing condition and a pre-disposition are defined.

The second is the nature of the power imbalance between insurer and client. In this case, the claimant found a willing ear and a pathway to get her case reviewed.

Some clients do not. Some will get that advice and determination not from a media contact, but from an adviser.

You can read the details here.

The second case is of an income protection claim for mental health problems.

The media article again highlights the power imbalance between the insurer and the client, and the difference between a process that suits the insurer (lengthy, detailed, and with many checks and assessments) and the experience for the customer - being unable to cope with the process, in this case, they sought legal assistance.

Also highlighted in the article was the fact that the claimant, by the nature of their illness, could be considered a vulnerable person.

When I talk to journalists from mainstream media organisations they comment on the consumer perception of the industry, they are usually surprised at high claims payment rates and the things insurers regularly do for their clients – for example, the wide scope of assistance offered during the Covid-19 crisis.

That isn’t a one-off either as I see several insurers already offering some relief for Cantabrians affected by flooding. They also seem to think that conduct law will have a much bigger impact than the industry does in terms of claims.

My experience is limited to life and health insurers of course.

But they always suspect matters are much worse than we believe.

One said to me late last year, “I still have no idea how many claims are declined, discouraged, or avoided unfairly,” although in our conversation they admitted, “I am conscious that I tend to only hear from people who have had problems with claims.”

Will media views remain adversarial to insurers or will a more nuanced view emerge which balances the eye-catching claimant against the need to protect the interests of other policyholders?

I like to choose an optimistic view – but it won’t happen unless we tell our stories better.

Tags: Opinion Russell Hutchinson

« Adviser business values hold steadyDeath rates and the impact of the End of Life Choice Act »

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Comments from our readers

On 22 June 2021 at 9:51 am JPHale said:
Well said Russell. A case for why advocation services need to exist. Though unfortunately it's still challenging for funding.

Something that potentially should be extended from general insurance into life insurance, claim preparation costs, maybe over a certain claim amount?

The trail doesn't typically reflect the cost of claims management and then a good number are with advisers and advocates that aren't receiving the trail, so the question of fees becomes an additional barrier for the client.

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