A growing number of advisers risk exposing themselves to legal, regulatory, and reputational risk by assisting clients with insurance claims without a documented claims framework, according to TPD Claim Support founder-director Trevor Battersby.
In a paper titled Safeguarding Your Practice: A Claims Philosophy for Financial Advisers, Battersby argues advisers need to make “deliberate, documented” decisions about:
- How they handle claims
- What services they provide
- When they refer clients out, and
- Whether they charge fees for claims support
He said the key issue was not whether advisers helped clients with claims, but whether they had a clearly defined philosophy governing that work.
Battersby said he’s concerned that many advisers avoid discussions around fees for claims assistance – particularly for TPD, IP, trauma, and death claims – because they believe clients expect the service to be covered by commissions or ongoing advice fees. However, he argues that failing to charge does not reduce liability exposure.
“The harsh reality is whether you charge a fee or not, you may be liable for a poor outcome,” he said.
The paper places particular focus on TPD claims, describing them as among the most complex and resource-intensive matters advisers handle.
Battersby suggested the ethical debate around charging fees for these claims had been “miss framed”, arguing the real question was whether advisers could properly service complex claims without being compensated for the time involved.
He also warned advisers that poor systems could expose them to complaints, litigation, and scrutiny under ASIC and FASEA obligations.
Battersby said advisers needed to make conscious decisions at four key stages of the claims process:
- Initial enquiry
- Claim pack preparation
- Submission
- Ongoing claim management
He argued many disputes stem from advisers failing to recognise when a matter should be referred to a specialist.
…you cannot afford to operate without a clear, documented claims philosophy.
His paper highlights increasing legal activity in the life insurance and TPD claims sector, with lawyers allegedly ready to tackle advisers who lack documented processes or submit poorly prepared claims.
According to Battersby, quality submissions and pre-vetting procedures were among the most effective ways to reduce both claim delays and adviser risk. He said incomplete or poorly evidenced submissions could prejudice client entitlements and create grounds for complaints.
The report also stresses the importance of maintaining claims-specific CPD records, eligibility checklists, claims fact finds and documented scope-of-service agreements.
“Whether you are a risk specialist with a dedicated claims team, or a generalist adviser who occasionally helps clients navigate the claims process, you cannot afford to operate without a clear, documented claims philosophy,” he said.
Contact TPD Claim Support for a copy of Safeguarding Your Practice: A Claims Philosophy for Financial Advisers.
