Adviser Frustration With Direct Insurance Claims

5
What is your main concern with direct life insurance products?
  • Non-disclosure issues at claim time (37%)
  • 'Direct' is not subject to the same compliance regime as advised 'retail' life insurance (20%)
  • Client has usually received no advice appropriate to their needs (20%)
  • Generally inferior terms and conditions (16%)
  • Leads to insufficient cover for the client (3%)
  • I have no concerns with direct life insurance (3%)
  • Pricing/value issues (1%)

Claims-related issues have emerged as the number one adviser concern with direct insurance products.

In response to our latest poll, more than one third (36%) of the many hundreds of advisers who have voted have said that non-disclosure issues at claim time is their primary concern. This outcome accords with the many comments we have received from advisers over time, who have expressed their frustration that the ‘average’ consumer is relatively uninformed when it comes to life insurance underwriting and to the implications associated, in particular, with innocent non-disclosure.

Other potential issues that have also attracted a share of adviser votes as their top concern with direct insurance include:

  • Client has usually received no advice appropriate to their needs (20%)
  • Generally inferior terms and conditions (19%)
  • ‘Direct’ is not subject to the same compliance regime as advised ‘retail’ life insurance (19%)

… one of the biggest consumer positives associated with direct insurance … is also one of its biggest liabilities

Based on the results to date, it appears that one of the biggest consumer positives associated with direct insurance, namely the opportunity to access life insurance with little-to-no underwriting, is also one of its biggest liabilities, at least from the adviser perspective.

As we indicated last week (see: The Problems With Direct Insurance), the Financial Services Council will be looking at the issues associated with direct insurance when it conducts its 2014 Life Insurance Conference in early April. The session dealing with direct insurance will focus on how direct insurance products can bridge the existing gap between ‘awareness’ and ‘understanding’, which is at the heart of the issue of innocent non-disclosure at claim time.

And while other key issues for advisers have also emerged, there are very few advisers (only 3% in this poll) who have no concerns with direct insurance products and processes.

Do you have your own concerns, and are they reflected in the poll results so far? Our poll remains open for another week, and we will also report the key comments and outcomes stemming from the Direct Insurance session at the FSC’s 2014 Life Insurance Conference…

 



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5 COMMENTS

  1. Asking Direct Insurance product floggers to act in a manner that is in the best interest of clients, is wishful thinking and will not happen. Their sole purpose is to sell policies as a one policy fits all, with no thought as to the devastating financial impact when a client needs to claim, is refused and is now uninsurable.

    This insidious Industry must be regulated or they will destroy the profitability of the heavily regulated retail life area and do nothing but dumb down and create a Life Insurance world of rubbish policies that I will not want to be a part of.

  2. Ditto Jeremy, not to mention that the insured person has false sense of security/protection, and will only “discover” the shortcomings when they need the policy to pay, unless they are fortunate and have the opportunity to meet with a “regulated adviser” to address their needs and place the appropriate coverage before any health changes occur.

  3. Agree with you both, but would add, the cost of cover offered is far in excess of “proper” life insurance. Also the question needs to be asked what about duty of care and consumer protection from these product floggers.
    This is a time bomb that will blow up some time soon and unfortunately advisers will once again be tarred with the same brush as this rubbish.

  4. The problem i see as the most disturbing but certainly not the only one is the ability for a consumer to purchase a life policy “over the phone” based on no personal advice being given and usually a complete lack of understanding of how the product works {particuarly income protection} As commented on earlier it is not until a claim is made and that claim is denied or reuced {indemnity issue’s and no understanding of how a payment is calculated} that the real problems begin
    Have no doubt !! When a direct claim is declined it effects the WHOLE INDUSTRY as clients do not segregate they simply come up with the age old statement :another insurance company that wont pay up” It tarnishe’s us all and makes a “mokary” of any legislation that is suppose to stop them becoming a statistic.

    You cannot impose regulations on part of the industry and let the other part “run amuck” and hide behind the “i only gave general advice alibi”

    It like partial circumcision you either go all the way or forget it !!

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