A growing number of protection advisers are voicing their dissatisfaction with facets of the claims process damaging the experience of both intermediary and policyholder. COVER editor, John Brazier, examines if the current claims process for protection is fit for purpose from an adviser perspective.
The claim is, more often than not, the moment that protection becomes real for the policyholder - the moment of truth, where the promised support at the point of sale becomes a tangible need. It's here that the industry has to prove that its mantra of ‘doing the right thing' is put into practice.
However, there is a growing mood of dissatisfaction among some protection intermediaries who believe the claims process has failed to improve over recent years, resulting in poor levels of transparency, lengthy waiting times for decisions to be made and communicated, and convoluted systems that only serve to clog the process further.
Consequently, the intermediary is left frustrated and the client underserved, further eroding the reputation of the entire industry. Ultimately, some protection advisers assert, the claims process is no longer fit for purpose.
Paul Reed, director at Vita, says that the underlying issue causing many of these complications is a lopsided focus on dedicating resources towards the front end of the insurance process where new business is generated.
"But then, at the moment of truth as we always label it, when customers need to make a claim is severely lacking in resource in helping customers when they need it most," he says.
"When they're taking out a policy, they could go to insurer A, B, C, D, E, F or G, but then it becomes a bit of a lottery when it comes to the claim stage. Is the enquiry going to get dealt with within six days or six weeks?"
Ultimately, he says, the focus has become too rooted on "percentages, not people" when it comes to claims, which draws attention away from the quality of service throughout leading up the pay out and the experience of the policyholder.
"If we as a collective, but particularly in this instance insurers, are not dedicating enough resource to be able to satisfy that, then something is fundamentally broken that we need to fix," Reed comments.
Paper cuts
For Robyn Allen, founder of Robyn Allen Solutions, the fundamental problem with the current claims process is twofold: "It's been communication and the time it takes. The time is the most damaging, especially when it's a death claim, because the people on the other end of the phone, emails and texts that update them are the ones that have to deal with it."
"It's incredibly traumatic because it opens a wound. It's a new piece of information - a coroner or medical report - that they didn't know before. It's a paper cut that just won't heal," she says.
It's a sentiment echoed by Reed, who points to the example of one client whose husband had recently passed away beside her one night, who had been left so turned around by the unclear instructions from their life policy provider that she simply put off dealing with it.
"She didn't have the headspace to understand what that paperwork was asking for," he explains. "So, she just put it aside and didn't do anything with it. That is not a good impression for the industry."
"When she needed it most it was too complex, too complicated. That is unacceptable."
While the heartache of losing a loved one is something the protection industry can only, at best, marginally mitigate, having to constantly revisit this at every stage of a drawn-out claim will only serve to make the claimant want to disengage from the process.
For their part, insurers have made efforts and progress in reducing the overall time claims take to complete and GP reports continue to be a thorn in the side of the industry at large, but there remains a systemic lack of activity when it comes to improving the claims experience for advisers and consumers alike, Allen says.
"We're in place we can all get to at some point, in whatever we do, where if it ain't broke, don't fix it," Allen explains.
"But there's been too many plasters and tape on it now that it doesn't work with modern day life. I would hope that behind the scenes they're working on this and trying to find a better way, but I'm also not convinced that they are."
Clear as mud
Cura Financial managing director and former chair of the Protection Distributor's Group, Alan Knowles, highlights an overall lack of transparency from insurers that permeates the claims process which leaves both the claimant and the intermediary in a state of frustration.
He details the case of a critical illness claim where an initial email went unacknowledged for two months, before the client eventually received communication directly from the provider several weeks later that the claim was being moved forward.
Again, Knowles says that the timeframes involved should be shorter to reassure policyholders that the wheels are in motion and provide peace of mind, but also that the intermediary is not left in the dark.
This helplessness is further compounded if clients do not sign specific consent forms, meaning the intermediary will often only receive generic updates on the claim: "If there's any kind of hiccups or hurdles, we're kind of left with our hands tied behind our back," he says.
"We can't give that full update, we can't help, so we're almost playing that real 'middle person' with it. It just feels a bit disjointed but I don't think that's changed. I don't think that's any different than how it was four or five years ago."
It's a frustration that Reed shares: "We will arrange the policy for the customer, we might even raise the claim with an insurer. Yet they won't give us updates on the claim unless they get written authority from the claimant," he says.
"Even though we might have already done a policy for that person and were the ones that arranged it, including the claimant on the joint policy, we still then have to get written authority from that claimant to be able to say that we are able to get updates on a claim. That's just backwards."
This issue of transparency also extends to the role of claims statistics published by insurers. There is no contention that these figures, which often exclaim millions of pounds of pay outs and 95% or higher percentages of total claims paid, have value.
However, there is also a feeling that these statistics only tell part of the whole story.
Reed says that while the over-arching messages portray a system working successfully, he would like to see insurers include the average time taken to transact a claim, spurring providers to review their performance against competitors' figures and seek to make their own improvements.
Meanwhile, Allen says that while the positive claims statistics and stories serve their purpose, it only shines light on one aspect of how claims are currently being processed.
"We need the real examples, because we've all heard the story of the critical illness claim that was paid within a day. Yeah, that's awesome, I would love that to happen for everybody," she says.
"[Providers] want to show the big numbers and I'm not against that. But when you're talking to the advisers, be transparent because as soon as we figure out you're not being transparent with us, that turns us off."
Speaking out
Different advisers will, of course, have different experiences with various aspects of claims journeys and what is deemed poor service is ultimately subjective. But voices of dissent comprising overlapping areas of discontent are becoming more common, painting a picture of a process that doesn't deliver in the way it's intended.
There is no question from the intermediary community that insurers will pay out on policy claims, but reticence also exists to speak out transparently among advisers, especially to "name and shame" particular insurers that cause frustrations.
Some, such as Allen, will drop hints on social media that observant peers may decipher, but the line between non-specific criticisms online and bringing working relationships with providers into question remains clear.
Knowles admits there is an "element of politics" at play, where some advisers would see a better outcome from speaking out publicly than others but at the end of the day advisers won't bite the hand that feeds them.
Part of the problem, he says, is that it's difficult for intermediaries to look beyond one or two stand-out examples of poor practice.
"Sometimes there's that case of ‘you've done really bad on this' and ‘this really stands out', but ‘actually, you've done really well on a few others for us and for the clients,'" he says.
"The problem is that, especially for advisers, the bad ones will always stand out and usually when it's bad, it's really bad."
Raising the standard
So, what is to be done to address the concerns of advisers when it comes to the claims process? Unfortunately, there is no simple or single answer, but ensuring that enough staff are available to answer phone calls from both advisers and clients in a timely manner seems like an obvious starting point.
Both Reed and Allen mention the amount of time spent waiting for some insurance providers to answer the phone as a consistent problem, often just to confirm or clarify a message that the policyholder has received directly from the provider.
Reed states that Vita has adopted a policy asking clients to only communicate through the intermediary if they are contacted by the provider to mitigate this.
"We would rather hold their hand through that process than have to deal with a large organisation where you end up speaking to someone different every time, where you have to relay the story over and over," he explains.
The distribution space has made efforts to hold providers to greater account with their claims processes, most prominently through the Protection Distributors Group's (PDG) Claims Charter, launched in May 2018.
The Charter was designed to establish a set of best practises for insurers, with qualifying criteria - such as dedicated claims handling teams being available and having named points of contact updated every two weeks - aimed at improving consumer outcomes.
Knowles, who chaired the PDG between October 2018 and May this year, said that the Charter has had a positive impact, most notably in increasing intermediary notification throughout the process. However, he also states that there were some oversights to how the Charter was originally structured.
"What we didn't ever anticipate is that it might take an insurance company four weeks to assess a claims form. So that's not part of the Claims Charter," he explains.
"Had we experienced this when we first developed the Charter, we probably would have said that claims must be acknowledged and processed within three days, one week or two weeks, or whatever timeframe. It might be that that's something that gets reviewed in the future."
Knowles points out that despite initial oversights, inclusion in the Charter is now reviewed on an annual basis, to ensure that providers are keeping standards where they should be.
In July, this year's signatories to the Charter were announced by the PDG, bringing the total membership to 21. However, there were also three providers conspicuous by their absence - Aviva, Canada Life and Royal London, indicating a failure either to meet the Charter's standards or a decision to not engage this year from the providers.
Ultimately, though, there is also a feeling among some advisers that a series of small changes to the current claims process isn't enough. The incoming Consumer Duty may play some part here, although any impact of the new rules will take a significant amount of time to evaluate.
Instead, there is a view that wholesale evolution is required to ensure that claims are brought up to the standard expected by intermediaries, needed by consumers and of essential benefit to the entire industry when it comes to doing the right thing for the customer.
"A person who wants an easy life says small changes would make a big difference, but I'm not that person," says Allen. "I'm the person sitting there saying someone needs to look at this from an outside perspective and find a better way, because the pandemic caused the digital revolution, forcing about 10 years of progress into two, and we're only going to keep going in that direction.
"If we don't start to think about overhauling this now, we're behind. We're already behind. We need to catch up."
