Holloway Friendly has called for the protection industry to agree and adopt a standard approach to publishing claims statistics.
The friendly society has published three claims paid statistics for 2016 across its income protection policies in a bid to highlight the multiple approaches used across the industry.
Holloway Friendly said there are at least three methods used by the UK protection industry to publish claims statistics, all bringing "different results."
The Holloway Friendly says its statistics for 2016 are as follows:
- ABI Method: 98%
- Friendly Society Method: 96%
- All Claims Counted Method: 90%
Phil Hull, propositions and portals manager at Holloway Friendly said: "The three methodologies have different slants on the same theme. In our view, the outlier is the ABI method as it also includes previous years' claims so is not a true reflection of what a company has approved during the year.
"This approach will skew the figures higher as a provider will only decline a claim at outset. That could be why the ABI chose that approach?
"The second approach represents the 'new' claims during the year and, from an industry point of view seems to be the fairest approach.
"The third approach takes the customer's viewpoint - they make a claim with the expectation that it will be paid.
Of course there will be cases where the claim is not valid, but ultimately one of the reasons why the public is sceptical about the number of claims paid is because there are occasions where providers turn down claims that should not have been made but then don't actually count them as a claim."
Hull continued: "If the industry is to be truly transparent then we should report two figures: firstly the number of claims received and secondly the number of claims accepted.
"The third approach should only include those where payment has been made or the claimant has returned to work within the deferred period.
"All other claims have been declined from the claimants point of view. It is then up to the providers to explain why those claims have been declined (examples could be due to exclusions or no loss of income etc.) when publishing their claims stats.
"In our view, everyone consistently using the same approach is vital. If that has to be the second approach in our document then so be it - but if we want to be open and honest with customers we should really use the final approach, even if it means we publish lower percentages."
Standardised approach to help advisers and customers
Andy Milburn, proposition and marketing director at Holloway Friendly said: "The team at Holloway Friendly are big advocates of publishing claims statistics on an annual basis.
"We all believe that anyone in the industry who suggests that we should stop publishing claims statistics is focusing on an inferior world that has gladly ceased to be the norm.
"However, having multiple approaches to this helps nobody and prevents easy comparison by advisers and customers.
The industry must adopt a standard approach to publishing claims statistics in future years that everyone agrees is fair."
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