Advisers Divided on Publishing Claims Decline Rates

Our latest poll has delivered a split decision on the question of whether ASIC should publish details of individual life company claims decline rates.

As we go to press, 47% of those taking our poll think individual claims decline rates should remain private, but a healthy 39% support the move to disclose this information.

One of the key issues raised against disclosing individual company claims decline data relates to the point made by the risk store’s Sue Laing that the race by insurers to top this ‘league table’ of decline rates will inevitably lead to sustainability issues. Replying to comments made about her position o this issue, Laing said “Neither naming nor shaming nor raw decline rates will benefit the industry (see: Warning to ASIC…).”

This view was supported by another adviser, who stated:

“Insurers should be held accountable, but decisions to disclose per insurer may have other consequences that were not intended.”

An insurer should not be “punished” for rightfully declining a claim.

And this:

“Decline rates in themselves do NOT tell a fair story as you need more data behind the decline. An insurer should not be “punished” for rightfully declining a claim.”

On the other side of the argument, however, one adviser has commented:

“…if you have nothing to hide, then why not be completely open and transparent.”

A lot of comments made by advisers and other industry stakeholders, however, have focused on the strict controls that should be placed on the publication of individual company claims decline rates, were they to be made public. For example, many advisers believe that any such public disclosure should be split by distribution channel:

“I would like to see claim decline rates published by company but … broken down by purchase route e.g. Group, individual direct and individual via advised.”

Adviser, Christoph Schnelle added:

“The first issue to handle, though, may be to have an industry wide definition of what a declined claim is or to divide them into a few categories.”

Laing also lends qualified support for the possible future publication of individual company claims decline data, but only under strict circumstances: “If any stats publication is to occur, then we certainly agree that the direct and retail (and group) stats be separate… We imagine the time will come when accurate and meaningful stats may be useful to publish beyond the use that the regulators have for them.” But Laing adds: “That time is a long way off, as the insurers need some very robust work done on their reporting, complemented by some serious consumer engagement/education, before declines info could be safely released and understood.”

Do you believe the public release of individual company claims decline rates will impact you or your clients? We think it will, based on your feedback. But will this be a good thing? Where do you stand on this question? Is the industry (and the public) ready for this?

Our poll remains open for another week, so take the opportunity to tell us what you think…