Protection is a safety net in case the unthinkable happens, says Kevin Stevens, and insurers must focus more on proving it will be there for customers in need
Over the past decade we have all become very good at collecting premiums, speeding up underwriting, and building market share, but it is debatable whether the same amount of effort has gone into looking after those who are forced to make a claim.
How do we treat these individuals? Is the process straightforward and stress-free? Are we really doing everything we can to ease the suffering of plan owners and their clients during what is probably the most traumatic time in their lives?
The truth is that we very rarely talk about what happens at the point of a claim, but it is a discussion that must be raised by advisers with every product provider because it has never been more important to treat customers fairly and with respect.
Protection consultant Peter Le Beau recently made the point that the sale of a policy represents a promise being made to a customer that they will receive an amount of money should any pre-agreed circumstances come to pass. He emphasised the importance of fulfilling these promises and suggested that some companies approached the entire process from the mindset of seeing whether there was any way in which they could avoid paying.
Le Beau makes a valid point. Although no-one is suggesting firms intentionally evade their responsibilities, the fact is that some simply do not have the structure or processes in place to deliver the standards of service required.
It can actually feel that the vast majority of our industry’s attention has focused upon the initial process of getting people into this market, and precious little consideration given to how they should be treated throughout the rest of the process.
We should not lose sight of the fact that advisers recommend customers take out protection policies for the simple reason that they may one day need to make a claim. With that in mind surely it makes sense for them to choose companies based on not only how people are treated at the point of sale, but also the support they can expect to receive should they need to call on the policy in the future?
Strong opinions
Although many advisers have not experienced a client making a claim, those with first-hand experience of the process will have very strong opinions on what is likely to satisfy their clients, and what failings can compound the misery in difficult times.
Clients today want a straightforward claims procedure so they know where they stand; what services are available to them; and when they are likely to receive both the financial and emotional help required. It is not a lot to ask.
What will happen after a claim is made? How efficient will the company be at paying out? Does the entire process take a painfully long time? Will they start getting picky and demand answers to probing medical questions?
Individuals are likely to pose all these questions when they are diagnosed with a critical illness or are unable to work. It might only be a small percentage of plan owners that actually claim, but these people require special attention. Instead of just filling out a general claim form, we need to make them feel that everything will be sorted out on their behalf, and that they will have access to a bespoke service rather than simply being a claims number in a queue.
The protection industry in this respect has possibly become too transactional. Most protection is sold on the back of a mortgage instead of the adviser talking to clients about the idea of protecting their families over the longer-term. The fact is that very few members of our society are wealthy enough that they can meet all of their expenses – as well as supporting their various investments – without the need to safeguard their income from sudden shocks.
Safeguarding your future
It would be nice for the industry to reach the stage where people recognise the importance of protecting themselves against the loss of their income as soon as they start a job, get married, and have children. Ideally it would be an automatic reaction to a situation and would help safeguard their futures.
Of course, advisers also need to decide which providers will best meet the needs of their clients. While some may focus totally on the price, the more astute will dig a little deeper and analyse the policies themselves. As well as their client’s budget, they need to consider a company’s reputation and experience in dealing with this type of business.
In many cases the claims paid figure will be seen as a vital component in this decision making process. Surely a company that has paid out 90% of claims is better than a rival that has only agreed to 85%? Well, not necessarily.
Dramatic definition changes
Developments within the industry over the past five years have made like-for-like comparisons extremely difficult – particularly in light of the fact that the definitions of various conditions have changed dramatically. It might actually be easier to pay claims on policies written a decade ago because definitions back then were a lot more encompassing than today, which in most cases is down to medical advancements and improvements in health screening.
This is understandable and acceptable. After all, these plans are not designed to simply supplement someone’s income.
However, it does make it difficult to compare companies that have been running for five years with those that have been around for a quarter of a century. The experiences of both will differ because the latter will have a much larger back book of business.
Ideally, companies need to be compared over exactly the same time periods, but as this is virtually impossible, advisers need to take everything into account: the price; the ability of the plan to do what is needed; and the claims paying experience.
The good news is that the industry has made great strides forward over the past 12 months as far as the Code of Practice on long-term protection is concerned. This agreement between insurers, which looks at the way claims are dealt with in cases of non-disclosure, has resulted in a significant drop in complaints on critical illness which must be applauded.
Looking to the future, there is hope that everyone will begin to acknowledge that changes need to be made as a matter of urgency in order to improve the perception of our industry in the eyes of both advisers and their clients.
Not only is it in everyone’s interests to make the whole process as accommodating and supportive as possible for plan owners, it is also our duty as product providers to keep the promises that we make.
Kevin Stevens is head of sales at Bright Grey
