Advisers who position themselves as ‘going in to bat’ for their clients at claim time may be adding to the underinsurance problem by perpetuating consumers’ distrust of insurers, a new report has speculated.
The ‘Value of Protection’ White Paper, produced by the Association of Financial Advisers (AFA) and The Beddoes Institute, and sponsored by BT Financial Group, investigated consumers’ perceptions of the life insurance industry, particularly in relation to the claims process. Consumers who had life insurance were interviewed about their expectations if they were to lodge a claim, and these were compared with the experiences of clients who had been through a claim.
The research found that one of the key barriers to the take up of insurance was a lack of trust in the insurer, and an expectation that they would not pay out. The White Paper went on to say that advisers may be contributing to this level of mistrust, by positioning themselves as the person that will champion the customer’s interest during the claims process.
‘Advisers need to recognise that a collaborative approach with the insurer rather than a combative approach will be perceived more positively by their client,’ the AFA said in the paper.
… a collaborative approach with the insurer rather than a combative approach will be perceived more positively
‘The consumer needs confidence that the insurer will deliver on the promise of the contract, and it is the adviser’s role to build that confidence from the time of sale, throughout the life of the policy, and most definitely at claim time. Behaviour that promotes the adviser as “keeping the insurer to their promise” has the potential to erode consumer confidence and is counter-productive to building long-term perceptions of trust in insurance.’
AFA CEO, Brad Fox, challenged advisers to re-frame the way they positioned themselves in the claims process:
“Advisers will represent their role in claims in different ways. Some advisers will position their service by saying: ‘Now at claim time, it’s important that you come to me, because I’ll make sure the buggers pay’, which is contributing to this perception that it’s going to be hard to get the claim paid.”
Instead, Mr Fox suggested advisers adopt the following approach when talking to clients about claims: “What if you said: ‘I only work with the credible insurers with a good track record of paying claims, and here’s the evidence to back that up. My role will help facilitate you getting to know your claims manager, because I already know you, and they don’t.’ That’s a whole different conversation. Now we’re talking to the heart, and the emotion of the person.”
“The evidence is that it’s not an adversarial challenge (to get a claim paid). And yet advisers sometimes position it that way, to increase their own relative importance,” he added.
Some advisers will position their service by saying: ‘… I’ll make sure the buggers pay’, which is contributing to this perception that it’s going to be hard to get the claim paid
Interestingly, the research showed that of the five clients with an adviser who were interviewed about their expectations of the claims process, only one said they would call their adviser first if they needed to initiate a claim.
“These consumers expect the relationship to primarily be with the insurance provider, rather than the adviser,” said Dr Rebecca Sheils, who conducted the research for Beddoes. “When I asked them what they would do to initiate the claim, almost all of them said: ‘I’d pick up the phone and call the insurer’. They didn’t say: ‘I’d pick up the phone and call my financial adviser’. They said: ‘It’s the insurer who’s paying, they’re the one we need to have the relationship with’.”
She then went on to ask the clients what role they thought the adviser would play in a claim, finding that the majority were looking to the adviser to help facilitate the relationship with the insurer, to make the process a bit easier, or help with paperwork.
According to Mr Fox, this should be a relatively easy role for the adviser to take on. “In most cases the adviser will have a lot more personal knowledge about the client than the insurer does. They’ll understand more about their family networks, their occupation, and understand more about them as an individual. So when we hear that the ‘nirvana’ for claimants is to have an ‘emotionally intelligent’ relationship within the claims process, that’s where an adviser can facilitate a significant amount of bridging. But the evidence from this report is that advisers haven’t been acting that way.”
To help advisers gain an understanding of how consumers perceive the claims process, the AFA will be showcasing some of the findings from its research at its upcoming national roadshows. Click here for more information on these events.
To read more about the support clients are looking for during a claim, see: Consumers Overwhelmingly Negative About Making Claims.
Dear Brad, A claim can be difficult and each one is different at the time of claim.
Insurance companies who have a good relationship with the adviser will pay, I have seen AMP and Asteron pay in 5 days.
Claims can be difficult and a lot of work lets look at it, a claim comes in it has all the required paper work and it looks simple.
The Insurance company writes to the Dr and Medicare and the specialist, its 3 months down the track and the claims manager who was looking after the claim has left, a new claims manager gets involved 5-6 weeks latter, they note that the Specialist report requires clarification and that Medicare has not responded also the hospital notes have not arrived.
Its now 6 months and still no Medicare the policy has a 30 day wait and its 6 months down the track.
So the adviser complains the client complains and a new claims manager is appointed, oh this one has moved to new job description and the senior claims manager has resigned for personal reasons.
If the insurance companies cant pay out on a 30 day wait why do they offer it? in this case the insured did not disclose he saw a Physio 3 times and never attended again
The BDM has busted her neck, but the client still waits a response was expected last week but hey what’s another week the client has gone broke anyway.
Like everything else in life, making a broad brush statement about how to handle claims for all Life Insurance claims is fraught with danger.
A person who buys a policy with no advice is far more likely to buy on price as they do not understand Insurance contracts and definitions.
These people face a higher hurdle at claim time and can face a stressful, confusing time trying to deal direct with the claims department, while trying to grasp what they are entitled to when reading their policy definitions for the first time, which unfortunately for many people, is when they need to claim.
There may be a bit of confusion around why advisers say they will ‘go in to bat’ for their clients.
We face a barrage of competition from Industry Super Funds, online and over the phone direct life insurance offerings that have inferior definitions and for many, an attitude of take the clients money now and underwrite at claim time.
When we say we will go into bat if you need to claim, it is to explain the pitfalls of clients going alone compared to utilising the expertise of an adviser who understands insurance contracts and will be there at claim time so the client can focus on recovery, not be put under huge financial and emotional stress trying to deal with everything on their own.
We are not discrediting the retail Life Companies products, we are proudly explaining why the client needs the cover, though to be very wary of cheap no advice policies.
Our main competitive advantage over the cheap and nasty product floggers, is our expertise and availability to guide and help our clients.
If we promote “going into bat” for our clients, that is not a negative, it is educating clients about the positives of quality retail Life Companies.
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