At the recent COVER Health and Protection Forum, Clive Waller called for greater regulation of back book selling. Do you agree that this would ultimately benefit clients and the market?
Phil Jeynes, PruProtect
There is a concern that customers will have a more negative claims experience from a company which has bought their policy as part of a back book, compared to those whose claims are being assessed by an insurer that continues to accept new business.
In terms of regulation, any entity purchasing a back book must assess claims in line with the policy terms and conditions.
In theory, there should be no difference and the ombudsman could still be used as recourse should a customer feel they have been treated unfairly.
But there remains a suspicion that so-called “grey claims” would be more likely to be declined were they not being looked at by an insurer with its reputation among the public and the intermediary community at stake.
Clearly, firms buying up back books are doing so with profit in mind and we should be wary of the potential for tentative public confidence in protection being eroded.
As an industry, we have done much to build our public image over recent years, but there remains the threat that this good work is undone.
Many insurers have left the market altogether and some of those remaining have become consolidated and their back books made separate.
I doubt we will see valid claims declined simply as a result of the policy being handled by a third party.
The issue will be whether the spirit of the claim is taken into account, rather than just the wording of the documents.
Mark Jones, LV=
Most of the claims we get are clear cut. However, there will always be a number of claims that fall into a grey area as medical practice evolves and the terminology of a few years ago is no longer a perfect fit for the diagnostics of today.
We are trying to get closer to future-proofing through the use of plain English. But without the benefit of hindsight, a few claims are going to require judgment.
I’m confident for all providers when considering these cases there is the desire to do the right thing by the consumer. Regulation requires it and the industry attracts those for whom it is second nature.
However, there is an argument that the second order motivators may be different, depending on whether the provider is open for new business and therefore has a vested interest in being seen as reasonable and empathetic towards claimants.
This is in contrast to providers that are closed to new business, where claim decisions have no marketing benefit and can only impact the bottom line.
It is difficult to see how any quoted company could be considered free from the possibility of takeover, so if there is a risk associated with back books, regulation could not be targeted only at the vulnerable.
I don’t agree that further blanket regulation would help clients or the market. I do believe that provider choice, not just through identifying the cheapest premium, has to remain one of the main ways in which advisers help their customers.
