The industry can now boast a full set of claims statistics from all the major providers, following Friends Life publication of income protection figures. But how much work is there still to be done? And how realistically possible is complete standardisation of how providers format their statistics?
Chris Pollard, head of underwriting of claims and operations, individual protection, Friends Life
Over the last few years there has been an increased focus on insurers publishing claims statistics. Many headlines focus on the "success" rate of claims, expressed as a single percentage. These self-reported outcomes are important to many advisers. The two most common reasons claims do not succeed are where the policy definition is not met or where there is misrepresentation.
Claims approaches will always vary between providers. High levels of telephone triaging can reject claims initially and leave them unreported, for example.
Coverage also varies; a provider offering the most comprehensive product today will receive more claims than a provider whose coverage might be limited to the early core illnesses.
A number of products carry exclusions - some at a policy level, some applied to the individual customer's circumstances and others even apply pre-existing exclusions. These factors are likely to influence reported claims outcomes, making it almost impossible to accurately compare the percentage number reported.
Publication of claims statistics has helped to evidence protection products are an invaluable way to protect ourselves and loved ones. The important issue now is to work with the Association of British Insurers on a standardised basis for reporting for more consistency. While we have to accept that there will always be inconsistencies, the majority of claims are paid.
Providers should continue to fully consider claims and look beyond the simple percentage disclosed to instead focus on the benefits of providing customers with the right protection.
Ian McKenna, managing director, Finance & Technology Research Centre
Few issues in our industry can be more important than building consumer confidence. Despite the fact that significant levels of protection can be bought for less than the cost of cable TV subscription, we still have a protection gap in excess of £2tn.
While a precession of mis-selling scandals has tarnished our industry, insurance companies keep on paying out tens of millions of pounds in life claims every month - but we need to make this message clearer to potential customers.
Having achieved a position where just about all insurers are publishing claims statistics, we now need to make the numbers clearly understood by advisers and clients.
To an industry audience that understand the finer issues, claim stats showing typically 92% of claims paid, might look like a reasonable performance. To a consumer, it might look like nearly one in ten claims are not paid. This is exactly the sort of uncertainly that causes consumer mistrust.
If one discounts claims declined for non-disclosure in the early years and outside policy definitions, then the numbers change significantly.
Clearly we cannot massage the truth, but by better explaining the situations that lead to certain types of declined claim and providing information in a constant format which advisers can understand, I believe we can help tell a more accurate story to consumers and advisers. If we cannot explain the value of our services we should not complain when people do not buy them.
