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Advice from advisers: Why insurers shouldn’t dump individual claims data

The group protection market only publishes claims statistics for the sector as a whole instead of offering payout rates for individual insurers. Some individual protection providers now want to emulate this model and stop publishing individualised claims data because they believe doing so is bad for business.

 
However, what works for corporate clients won’t translate to individual protection. Seeing claims data for the sector as a whole may be enough for companies, but advisers know that individual customers need more to build trust and get them over the line.
 
Drewberry’s research has found that only 8% of consumers believe insurers have got better at paying claims over the past decade – and almost half think that they’ve got worse. It’s not true, but it’s a misconception that’s stuck around. It reveals a lack of trust between the public and insurers, one that will only deteriorate if insurers turn their backs on publishing payout rates. 
 
In stats we trust
 
Advisers always keep claims data to hand, but we don’t use them in the way that insurers might think. We don’t pick and choose between insurers based on their payout rates – our primary concern is doing the best job we can for our clients. That means we examine other factors far above claims statistics to make sure the customer is getting the right policy for them, such as premiums, policy terms and underwriting considerations.
 
Claims figures are there only to back up the recommendation, to show customers that insurers do pay their claims. They’re a vital tool to build consumer trust, essential in an environment where Drewberry asked consumers to guess payout rates on protection policies and the average response was 72%. A full 87% of those Drewberry polled gave a figure short of the true total.
 
Even with current levels of transparency, consumers are concerned that if they buy cover it won’t be there when they need it. 1 in 5 people in a recent Drewberry survey said they’d been put off buying protection because they were worried insurers wouldn’t pay claims.
 
With consumer trust in the industry so low, returning to the days before insurers routinely published these figures makes little practical sense.
 
Stopping the press
 
A denied claim in the protection sector offers up headlines to the media on a platter, even if the claim was legitimately turned down. Insurers argue that because these stories will always draw attention, journalists inevitably end up using statistics revealing other denied claims as ammunition.
 
Continuing to reveal claims data is one way to aim for more positive headlines, but insurers should go further and consider how they publish the statistics. They could publish the reasons claims are denied, especially some of the more bizarre claim attempts. Doing so would help spread understanding that a policyholder who doesn’t disclose a heart condition and goes on to try and claim for anything related to it can’t be covered.
 
Adding some life to what can otherwise be dry statistics would also help. A table of figures will never make headlines in mainstream press and might sometimes even struggle for attention in trade press. One provider has decided to integrate the release of figures into their PR activity so the data immediately becomes attached to a more newsworthy story. This provider uses awareness campaigns, such as those for cancer or heart attacks, to not only educate clients about the dangers of these conditions and how to reduce their risk, but also to release related claims data. 
 
This lets customers see just how the insurer has helped people in specific situations and means the media is more likely to pick up the statistics in the first place. Without a negative story attached to them, the figures get the positive light that the current high payout rates deserve.
 
The media blowback from stopping publication of claims data would be huge, with insurers accused of trying to sweep bad news under the rug. Insurers can avoid this by not only continuing to publish payout rates but also improving the way the industry interacts with the media when it releases claims statistics in the first place.

More or less
 
With advisers and consumers both finding claims data useful, insurers should publish more, not less. Some insurers may be worried that their claims data compares poorly with their peers and that’s behind their wish to stop publishing statistics. 
 
However, this could be because they have a higher number of older policies on their books written with a definition of incapacity below ‘own occupation’ cover, such as suited occupation. It’s harder to make a claim on these policies because the bar to what’s considered incapacitated is set higher. It might be that when the insurer’s policies own occupation policies are compared like-for-like with those from other insurers, the claims rates are comparable or even better.
 
More data, not less, would reveal this. It’s a rule we should all follow as we look to boost consumer confidence, improve our standing in the media and encourage more consumers to protect themselves and their families going forward.
 
All it will take is resisting the desire to pull back from offering claims data and starting to open up.
 
Tom Conner, Director at Drewberry.

Author: Tom Conner
Posted: Wednesday, December 14, 2016 | 6:39:41 PM


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