Recent reporting of claims issues relating to CommInsure and other policy holders has reignited the debate about the merits of standardising trauma definitions across the sector.
The topic of standard trauma definitions is not new. For example, it featured in discussions reported by riskinfo in 2009, including the fact that standard trauma definitions were successfully introduced into the UK market a few years earlier, in order to address consumer calls for greater consistency and clarity at claim time.
Founder of the risk store, Sue Laing, has spoken with riskinfo about how a standard set of trauma definitions may work, and the consumer benefits that could potentially flow from such a move.
Laing said, “After our risk store adviser forums in 2008 and 2009, we pulled together a forum for the mainstream retail insurers’ senior and executive management to discuss the industry’s issues and challenges – especially in trauma.”
She noted that MLC’s current Head of Products, Nick Kirwan, who in 2008/9 was Associate Director of the Association of British Insurers, provided input to the discussion that clarified the outcome of the UK’s drive towards minimum standardised key definitions in trauma products and the standard terminology designed, importantly, to reduce consumer confusion.
Promise a minimum standard definition and advisers might be a whole lot more engaged…
She added, “Promise a minimum standard definition and advisers might be a whole lot more engaged without the fear of selling the ‘wrong’ definition.”
According to Laing, the UK process commenced with the standardising of a few key definitions, which eventually expanded to over 20. Her suggestion for Australian insurers is to consider the possibility of standardising five or six key definitions to start with. She said these would become a base set of definitions that insurers would agree to implement, but which would also allow for the opportunity of enhanced definitions, should the product manufacturers elect to take this option (and thereby retain a potentially competitive advantage).
Laing also suggested that representatives from organisations such as the National Heart Foundation and the Australian Cancer Council be co-opted onto any committee whose role was to determine and agree on the wording of those key definitions.
In calling for the industry to consider the possibility of introducing standard trauma definitions, Laing readily acknowledged that such a move would not necessarily be a ‘silver bullet’ to solve all claims related issues, but could become an important part of a solution that delivers more consistent outcomes and builds trust in the mind of the consumer…
I’m torn between the self interest of making a handy living out of differentiating the various trauma policy definitions and the benefits for the consumer with standard definitions. I’ll go along with standard SO LONG as policies offered under General Advice are forced to do the same.
There’s an angle that will be on the table if I have any input, disqus_sxdzTFJ28Y! I admire your honesty and on a more serious note I do worry that advisers are sometimes wedded to showcasing their expertise in definition differentiation. Poor clients, though, who must listen to this and fret over the choices! It would be a better outcome to showcase an understanding of the ancillary benefits (services?) and their value – they will still be there but hopefully more of them!
@ Sue Laing,
I’m not sure even if you have standard Trauma wordings you won’t still be at the mercy of the Life company.
I think it depends on the potential payout because you and I have had this discussion before.
For example, approximately 4 years ago one our clients lodge a Loss of Hearing Claim for $400,000 with Comminsure. He had the Trauma Plus contract and had diligently paid his premiums for more than 10 years.
According to a Worker’s Compensation audiologist he’d lost 58.0% hearing in one ear and 64.0% in the other, normal hearing aids would not help him and according to the audiologist,… he was deaf.
An experimental Cochlear ear implant was tried but if there were two people in a room having a conversation, he could not discern what they were saying without lip reading.
The Comminsure Trauma loss of Hearing Benefit stated at that time the Life insured had to have suffered the complete and irrecoverable loss of hearing in both ears.
In our view he’d completely lost a quantified amount of hearing in both ears, it was irrecoverable and according to an independent Worker’s Compensation audiologist … he was deaf.
What the Comminsure definition doesn’t do is quantify what the irrecoverable loss of hearing is. If the definition stated the “Total and complete irrecoverable loss of Hearing in both ears, we would interpret that to mean a 100.0% loss of hearing.
So theoretically under the Comminsure definition, our client could lose 92.0% loss of hearing in one ear and 95.0% in the other and according to them, he’s still not deaf.
So my question is, since these definitions are at the whim of a Life insurer who can weasel their way out of a genuine claim, how deaf do you have to be for them to meet their obligation.
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