"I'm an IFA who advises on protection. How can I use published claims statistics with clients? Is there an accepted sales technique for using such statistics? I'm also concerned about comeback of clients who might focus on percentage points and just want to go for the insurer with the highest pay-out rate"
Dean Mason, Masons Financial Planning
Insurers have made these statistics more transparent recently. I have mentioned claim statistics at fact-find stage and I see no reason not to continue with this. It can be a good PR exercise for the industry, because the public would be shocked at the high percentage of claims that are paid. They are fed on a diet of consumer programmes focusing on the odd case where a claim has not been met.
It also highlights the dangers of non-disclosure and openness of clients on their medical history and health status. I have always made it part of my client discussions to mention the key reasons why their claim may not be paid, knowing there is likely a 97% chance their claim will be paid if they are brutally honest.
Tele-underwriting also has a part to play here. Many clients see their IFA as a ‘friend' and may be less forthcoming than they would be to a ‘faceless' insurance company, particularly with sensitive issues.
I already integrate claims data into the advice process. This must be backed up by other reasons you have recommended that product with that provider. If a client has bought into protection, they have thought to some degree about the prospect of something happening to them or their loved ones. The thought that one insurer is more likely to pay them or their loved ones can be a powerful one, and one which their adviser needs to consider before acting on their behalf.
Tom Connor, Drewberry Insurance
It would be useful for both consumers and advisers to be able to compare the pay-out rates of leading insurers when deciding which insurer to go with or recommend. However, as the method used to calculate these statistics varies, it isn't really comparing like with like.
This doesn't mean the statistics are useless. In fact, they are extremely useful from a sales perspective, bbecause consumers expectations of pay-out rates are much lower than the reality. In Drewberry's 2013 Health & Protection Survey a sample of 2,000 workers estimated that the leading life insurers paid only 50% of all life insurance claims, when in reality the figure was 98% of claims.
Although it isn't really possible to compare claims statistics between insurers when making a recommendation, it is a great tool to help realign consumers' expectations and put some faith back into the industry.
