Trust me, I’m an insurance company

Life insurance companies like to market themselves as trustworthy brands, but that is not addressing the problem at hand, writes Col Fullagar.

A review of the corporate values statements of a cross-section of insurance companies will reveal a common theme: 

• “We always follow through on our promises”  
•  "If anything ever does go wrong, you’re covered"; and 
•  “(INSURER NAME) – a name you can trust”.  

Insurers want those who recommend or purchase their products to trust them and  the primary point of trust is at the time of claim; the management of the assessment process and the making of a decision whether to pay the claim. 

Insurers, however, not only ask to be trusted but they appear to believe they have an entitlement to trust by way of their track record: 

• “Last year we paid $248 million in claims to 3,250 policy holders”;
• “98 per cent of all claims lodged are paid”, and 
• “Here is a testimonial from a happy claimant”. 

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Unfortunately, despite the desire to be trusted and a belief of entitlement, trust just does not seem to happen to the extent wanted because two popular perceptions persist: 

• “Yes, I know they pay squillions in claims, but I absolutely know they won’t pay mine;” and 
• “Even if they are eventually forced to pay my claim, I know the process will be terrible”. 

But, says the insurer, “We care for our customers”. 

“No you don’t,” says the punter, “You care for your shareholders”.  

Some exhort insurers to try harder, citing the need for more advertising of “good news stories”, but others suspect that irrespective of the advertising budget the problem would continue. 

Is it possible to change the popular perception? 

Swimmers caught in a rip are told not to fight against it as this can lead to panic, exhaustion and a higher risk of drowning. Instead, one suggestion is to tread water and let the rip carry you beyond the breakers; then swim across it and back to shore. 

Is there an opportune message in there for insurers: ie, stop fighting distrust for a moment and instead, go with the flow and embrace it?  

For insurers, as for swimmers, this does not reflect defeatism and acceptance of one’s fate; it is recognising that a problem exists and responding by implementing a life-saving strategy. 

Strategies to counter a lack of trust by consumers are common to many product providers and one method used is to make various commitments by way of written guarantees. 

Within life insurance contracts guarantees already exist; for example, a guarantee of renewability for non-cancellable products and a guarantee of upgrade in many life insurance policies.  

Now, of course an insurer cannot guarantee to pay every claim in an attempt to win insureds over; but in fact reasonable people do not want or expect this because they recognise that not all claims are valid.  

When they claim, however, what insureds do want and expect is an open, respectful process and a fair hearing. They want the insurer to hold itself accountable. 

And therein lies the problem – insurers no doubt believe they are providing an open, respectful process. They believe they give insureds a fair hearing - but in fact too often the insured does not see it this way because the insurer’s conduct is falling short of expectations. 

Thus a possible strategy for insurers is to provide a guarantee - a Guarantee of Claims Accountability which would give an assurance in writing about how the insured will be treated in those areas that relate to making claims open, respectful and fair. 

The following are a few examples of claims accountability that might be included; there are others. 

A fictitious insurer, Draconian Life, is used to demonstrate behaviours that fuel unfavourable perceptions. The behaviours themselves are not fictitious. 

Guarantee of claims accountability 

“When you make a claim under your policy ¨ if we require additional information in order to assess your claim, we will explain to you the reason we require that information.” 

After assessing a claim form, an assessor will generally request additional information: 

• medical reports; 
• financial statements; and 
• occupation details, etc. 

Unfortunately, some assessors appear to believe that providing a reason for requirements is unnecessary because “¨ the policy document gives us the authority to call for additional information”. 

Communication is all-important when it comes to claims and an attitude of “Lodge your claim and let us assess it. When we have made a decision, we will let you know” has an immediate and adverse impact on the openness of the process.

This attitude has no place other than in the claims department of Draconian Life. 

The reason for the additional information will be obvious to the insurer, and the assessor might be tempted to think it will similarly be obvious to the insured.

However, the reason for various requirements is not obvious to all insureds, and if they are to assess whether a requirement is reasonable or not, they need to know why it is needed. 

Apart from anything else, it will be reassuring for the insured to know that their position is respected and they will be provided with a reason rather than just being told what to do. 

“If we require additional information, we will advise you in advance and, where possible, we will provide you with a copy of the information.” 

Additional medical information may be required. 

Even though the insurer will no doubt hold an authority to write to past and present treating doctors, there is little more personal to someone than their medical history. Being told who is being contacted and why is not only respectful, it is a common courtesy. 

It may be, however, that the insured, knowing where information is being obtained, can alert the insurer to a better way of obtaining it: for example, “Dr X has all the test results, not Dr Y”, thus avoiding delays and reducing claim management costs. 

Prior knowledge also gives the insured the opportunity to follow-up the doctor if delays occur. 

One comfort an insured has in regards to the obtaining of medical information is that confidentiality is largely protected under common law. 

When additional non-medical information is required the same protection may not apply; thus additional care and consideration is needed. 

In a recent example, an insured in the entertainment industry lodged a claim for total and permanent disability.

The insurer wrote to a third party seeking additional, non-medical information; however, in doing so, the insurer unnecessarily informed the third party of the type of claim - with potentially disastrous consequences for the insured’s public image and reputation. 

Prior advice to the insured could have reduced the chance of this occurring. 

Apart from the limited exemptions to information access under Privacy Laws, the insured should directly or indirectly be given the opportunity to review copies of information obtained by an insurer as and when the information is obtained.  

Draconian excuses, such as that the insured may influence the assessment outcome, should only apply if there is a reason to suspect the claim is invalid.

To do otherwise is to incorrectly assume all insureds will act in anything other than an honest and a reasonable way.  

If the insured has the same information as the insurer, the insured is better able to understand the insurer’s actions and final decision. 

“If we require you to be independently examined, where possible we will provide a list of examiners from which you can choose.” 

It is not uncommon for an independent specialist examination to be deemed necessary by an insurer. 

It is also not uncommon for the insurer to write to the insured telling them an appointment has been arranged with Dr X on a set day and at a set time, and that  “if you are unable to attend, let us know ASAP, otherwise you will be charged a cancellation fee”. 

Suffering from a sickness or injury will often leave an insured with a feeling of not having full control over their circumstance. Being directed to either turn up or pay up will hardly help. 

The insurer’s ability to maintain control over examination arrangements is not compromised by giving the insured options of alternative doctors and asking the insured for convenient dates and times - and this protocol may give the insured a much-needed boost in self-confidence, self-esteem and part-ownership over the claims process. 

“If we do not accept your claim, we will give you the reasons for our decision.” 

There can be up to three levels to a claim decision. 

The first is the decision itself, generally accept or reject. 

If the claim is rejected, the second level is a reference to the relevant policy terms and conditions. 

The third level is to explain in a way the insured can understand how the claim falls short. 

The first level is universally met. The second is sometimes met. But rarely is the third level achieved in such a way that the insured genuinely understands why their claim was rejected and, importantly, what they might do to have the decision altered. 

Without this understanding, it is no wonder insureds might feel they are not being treated fairly. 

“If you do not agree with our decision and you wish to discuss the position with us, we will continue those discussions until we all agree no further progress can be made.” 

Again, Draconian Life will take a position of: “That’s our decision. If you do not agree with it, there is a process you can follow: ie, contact the internal complaints department, then go to the Financial Ombudsman Service (FOS) or, if outside its jurisdiction, go legal”. 

Of course, sometimes the insured may immediately request a review by the insurer’s internal complaints area; however, it is also possible to disagree with a decision without it being a complaint. 

More may be achieved, sooner and at a lower cost, if open, informal discussions take place between those who are involved in the assessment process, rather than immediately implementing a formal process involving others unfamiliar with the claim. 

And why shouldn’t discussions continue until a resolution is achieved or all parties agree a stalemate has been reached.

Unilateral decisions on the part of the insurer do little to assist the insured to feel they are being respected or they have any control over their situation. 

This process would see FOS referrals only being made for matters that truly cannot be resolved, which in turn would reduce FOS turnaround times. 

“If we all agree no further progress can be made we will assist you to identify other options available to you.” 

If a respectful process is followed, the lack of a resolution or agreement does not necessarily mean that an amicable referral to a third party arbitrator cannot be made. 

“We may appoint someone to undertake surveillance activities in order to validate a claim.  We will not advise you in advance of or during surveillance; however, we will advise you when surveillance has been completed and provide you with a copy of any information gathered if you request it.”  

This suggestion was recently made to someone involved in insurance claims and their response was, “I would tell the insured to get stuffed” – certainly, another management contender within Draconian Life. 

Surveillance is a valid tool to assist the insurer in assessing a claim; however, it will involve an insured and possibly even their family being covertly watched and sometimes filmed. 

An unwillingness to advise an insured after the event and to offer to provide details of the findings might be perceived as the insurer being unwilling to be held accountable for arranging surveillance. 

The only time the Guarantee of Accountability will not apply is when we have reasonable grounds to believe the insured has not met their Duty of Disclosure or is involved in an illegal activity. 

Safeguards are necessary as not all claims or claimants are genuine. 

Again, reasonable insureds recognise this and support the undertaking of prudent precautions. 

Summary 

Corporations yearn for it but very few achieve it ¨ let’s call it a dominant strategic position. 

The positioning may arise from something material such as a person or a product or it may arise by way of a philosophy.

Whatever it is, it can define the organisation such that when we think of one, we automatically think of the other. 

Ask any number of advisers about which insurer is the best in regards to claims management and payment and the lack of consensus will be clear. 

Despite their attempts by advertising and the quoting of statistics, no one insurer is able to claim the high moral ground and promote itself as the best. 

The presence of a Guarantee of Claims Accountability in one form or another might not only provide an insurer with access to a dominant strategic position: it might also create yet another basis for the recommendation of their product. 

Irrespective of any favourable outcome for the insurer, there can be no doubt this Guarantee will provide the insured with a greater sense that their claim will be treated in an open and respectful way and they will be given a fair hearing. 

The irony might be that by embracing distrust and forming a strategy around it, the insurer will achieve the trust they want and to which they may believe they are entitled.  

Col Fullagar is the principal of Integrity Resolutions Pty Ltd.