Following recent stories of declined claims in the Mail on Sunday, Kevin Carr uses lessons from Britpop to argue why insurers should pay out rather than say a claim does not 'meet the definition.'
I was listening to the #BestOfBritish countdown on Radio X over the Easter weekend while reading the Mail on Sunday personal finance section.
More than 50,000 people cast their votes in the annual Radio X list of the top 100 British songs of all time and before the list was announced Noel Gallagher was quoted as saying "never trust the British public".
However, with the entire top 4 belonging to Oasis, Noel then said "the people have spoken".
Bizarre as it may seem, I couldn't help but draw analogies with declined protection claims in the press because like it or not, like Oasis dominating The Beatles, The Stones and more, the court of public opinion outweighs pretty much anything else.
10-15 years ago it was an all too regular occurrence to read about declined claims pretty much every weekend.
We watched them too often on TV too as so called industry experts squirmed when trying to defend what sounded like the indefensible. And we spoke to clients the next day to allay their concerns and keep their cover in place.
The industry has done a lot to move forward since those days. We have severity based payments and quite rightly the industry is discussing moving towards impact based definitions, as opposed to just using the name of any specific condition.
We have better and clearer definitions, less non-disclosure, better systems and paid claim stats have risen from an average of around 80% to more like 90% overall.
It's not enough though. Paying 90% of claims is good unless you're one of the 10% - and public perception is probable more like 50% than 90%.
Regardless of the rights and wrongs of individual cases, perception beats reality. If it sounds bad it probably is bad and declining protection claims on the grounds of ‘not meeting the definition' is becoming irrelevant because the court of public opinion outweighs policy terms.
It outweighs technical rights and wrongs. It outweighs precedent. Throw in social media and the point is multiplied exponentially.
If we want to grow the industry, improve its credibility and protect more people then it quite possibly no longer matters whether or not a claim ‘meets the definition'.
If it sounds really bad we should pay. That doesn't necessarily mean the full amount - but something is better than nothing.
We should then change the policy terms for new customers to ensure similar claims are paid on the same basis in future, and we should offer existing customers the opportunity to upgrade their definition for an appropriate increase in premium.
Even if you think this is wrong, even if it is fraught with issues, even if the challenges meant you lost interest half way through, the bigger point still stands:
The court of public opinion rules and people are becoming less likely to pay high premiums for cover they may never need - especially if there's a doubt that it might not pay out anyway.
As experts we can read between the lines and apply what appears publicly to our knowledge of typical terms and conditions and perhaps see the insurer's point of view. It doesn't matter.
What about legacy systems, TCF, pricing issues, manpower and more? What could be more TCF than changing the policies we offer to pay more claims?
As many have said before, our industry is fighting over a shrinking amount of business.
So let's promote 99% paid claim stats with a product that does what it says on the tin.
And by the way, the four Oasis songs were the 1995 hit Wonderwall on top. It was followed by Don't Look Back In Anger (2), Champagne Supernova (3) and (perhaps ironically in this context) Live Forever at number 4.
Kevin Carr is chief executive of The Protection Review
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