Efforts to advance insurance claims are being hampered by the involvement of legal representatives but insurer created claims assistance services are also unlikely to win over consumers, a claims management advocate has stated.
Kate Lane, the founder of insurance claims assistance service Life Matters, said lawyers and solicitors had become involved in claims due to many insured people believing their claim would be denied after becoming uncertain of life insurers, following recent media reports.
Lane, who has worked in the life insurance industry for the 15 years, including the last eight years in claims services for firms including TAL and Asteron, said the small number of bad claim stories had made people sceptical of insurers, and legal representatives had begun to act as a claims support service.
Lane said the legal representatives had not shortened the process and often cost those with insurance policies more time and money than if they had let the claim progress naturally.
“Solicitors can delay the claims process by up to 12 months…”
“Solicitors can delay the claims process by up to 12 months while we have been able to expedite claims by just having a conversation with the insurers,” Lane said, adding that lawyers advertising ‘no fees’ did not reflect other costs which often equated to a sizable percentage of a claim payment.
“We have seen solicitors charging up to 40% of a claim amount because while they may not charge fees they charge for disbursements and these depend on the work done while pursuing the claim,” Lane said.
By comparison, Life Matters charges $1,000 for an income protection claim and 3% of any lump sum claim – if they were accepted, with Lane stating consumers needed a back-to-basics service to reduce confusion around claims.
Lane said this confusion had arisen because of the complex and lengthy processes insurers had created around claims which were unlikely to be remedied by industry created claims services.
“These processes do need to be streamlined as they can be confusing for people not familiar with insurance and claims and it may appear that the insurer is not thinking about the customer at the end of the process,” Lane said.
“…if consumers see an industry based claims assistance service run by insurers, all they will see is the insurers…”
“Third party services can assist but if consumers see an industry based claims assistance service run by insurers, all they will see is the insurers and the perceived problems with claims.”
Lane’s call for legal representatives to be less involved adds to that of Financial Rights Legal Centre Principal Solicitor, Alexandra Kelly who stated at last month’s Financial Services Council Life Insurance Conference that lawyers had created an extra layer of assistance but had not made insurance claims less difficult.
“The focus should be on simplifying the claims process and everyone should be achieving that, instead of adding on additional costs or confusion for a consumer as to what is the role of that party? Are they an advocate? Are they an information provider? Who is going to fund them?,” Kelly said.
“The claims process should be an in-house process that should be so simple that anyone can do it. We should not be at the point that a claims form is so difficult and confusing and upsetting that they feel they need support.”
Why don’t the government have an enquiry into the parasitic behavior of Lawyers. They could also ban disbursements just like they banned commissions on investment products. In my dealing with lawyers they may quote a fee upfront but will never quote disbursements. You would think disbursements are their expenses – no – the last solicitor I dealt with had a file opening fee of $25, a fee for calling their mobile, photocopy fee of $1 a page. Maybe we could replace commissions with disbursements in our industry – what would ASIC think about that?
The lawyers would just sue ASIC if they tried to implement that change!!
The sooner ASIC can prosecute unconscionable conduct by insurers the better off for the consumer.
Life Matters charges 3% for a successful lump-sum claim. On a fairly typical $1M Life / TPD policy, that’s $30,000!…….. all for doing something that almost certainly would have occurred WITHOUT their “assistance”!
Good luck claiming tpd without an adviser, almost no chance of a payout within 12 months. With an adviser you could see it far sooner, 30k is nothing compared to the value you receive. Clients would be 100% aware of the fee they will get charged as well as the fact they are able to handle the claim themselves.
You can represent yourself in court too, would you not rather pay a quality lawyer?
Life Matters takes off so much stress and confusion during the whole process .The service is personal and genuine. And with Life Matters involvement I seen real results real quick.
Lol. What is this shill account?
This reflects pretty poorly on Life Matters…
Instead of hitting risk advisers commission through the LIF what should be banned are these fees by groups like Life Matters or Lawyers. Charging these high fees at a time when clients need their cover the most is a mongrel practice. Insurers making the claims process hard again is bad practice. But I haven’t dealt with a single claim yet that wasn’t paid. I don’t charge a fee for this help because I was paid a commission for the policy and an ongoing servicing commission.
Reality check, looks like you might need a check of your own…..
Mongrel practice? The people paying for this service either do not have access to an adviser (super insurance) or they do not have an adviser (orphaned clients).
So, what you are saying is that someone should not seek expert advice and rather go at the claims process on their own? Just because you do not place any value on your own advice, doesn’t mean that others are not able to provide value to their clients that FAR exceeds the amount paid.
3% for a death claim. Got to get me some if that
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