The latest Scottish Provident set of claims statistics make for some interesting reading – there are both positive and negative points.
The £43 million in claims paid in the first half of the year is not an insignificant sum and the total now stands at over £1 Billion in critical ilness payouts since 1996. Thats a huge sum of money which will have benefited alarge number of people in their hour of need and proves what a valuable social function life companies perform.
Reading the more detailed report information provides a valuable insight., for example the average period from start to claim is 9 years and the average age at claim is 49.
The critical illnesses producing the highest amount of claims are Cancer 60%, Heart Attack 16% and Stroke 6% and the report further breaks down the cancer claims showing the biggest claim areas as breast 34%, bowel/colon 11%. malignant melanoma and prostrate both at 7%.
But….. the report shows that 7% of claims were not paid and this remains a concern. The two reasons given are a) material non discloure at the point of application and b) not meeting plan definitions and the report provides some examples of each.
Non-Disclosure – There will always be a small number of applicants who deliberately withold relevant medical information and if they are intent upon doing so there then this is their responsibility alone and this is a point which should be acknowledged by those who are critical of the life insurance companies.
However we need to ask ourselves whether as an industry we are really doing all we can to try and avoid ‘non deliberate’ non disclosure. Furthermore we would do well to consider whether this is always a point of sale issue. It is a fair question to ask how much non disclosure might be resulting from the fast track underwriting process itself. Are we sure that the right messages are being sent out if we are asking only a limited number of questions or where we are asking questions which refer to certain health events only within the last five years?
Interestingly a significant percentage of clients with pre existing health conditions express to us their preference for an underwriting process which includes the obtaining of medical evidence from their GP. They feel that this might cover anything they accidentally failed to remember.
What really would be of value would be to see insurance companies publishing comparisons between the rates of non disclosure applying to cases underwritten 1) without and 2) with further medical evidence.
Not Meeting Claims Definitions – This remains a thorn in the side of the life industry and we need to consider whether there is not room for improvement in how this issue is being dealt with. What we have at the moment is a stand off between the life insurance industry who claim that they are comitted to paying all ‘valid’ claims and those who claim that the industry deliberately rejects some claims that should be ‘valid’.
But in a standoff not much progress is made.
What needs to happen is for both sides to sit down with each other and work together. The long term prospects for the sales of critical illness and other socially valuable protection policies would benefit considerably from involving the consumer in the design, decision making and marketing process. The same applies to a number of other issues currently affecting the life insurance industry (eg STIP, simplified products, activities of daily living, consumer education).
There is a fear among many consumers of non payment at claim. This fear is sufficient to stop some from buying and for some it provides a convenient excuse not to buy. But even among many of those who do buy there remains a nagging doubt that the insurance they have purchased will turn out to be ‘invalid’.
A great deal more needs to be done to research this problem.