Advocate: Do IP claims statistics make a difference?
Does disclosure of income protection claims statistics really matter when recommending a product to a client?
Yes: Alan Lakey, partner at Highclere Financial Services
Today the bulk of the insurance industry has released claims statistics for their income protection products, leaving the laggards that have decided not to reveal figures in a sticky position whereby they are viewed through jaundiced eyes for holding out.
Some argue that there is not yet any clarity on what actually constitutes a claim or a declinature and this is perfectly valid. Unfortunately, consumer and adviser perceptions will centre on concern that the figures must be dire if a company refuses to publish them.
Simply reporting percentages of claims accepted or denied is insufficient. For example, Company A may decline 130 of 1,300 claims, whereas Company B may reject 3 out of 25. In percentage terms the statistics for both companies appear similar, yet the 130 declinatures for Company A is deserving of far greater scrutiny and therefore far more information is needed to explain matters.
Much will also depend on the claims definitions favoured. Any provider with a history of offering ‘activities of daily living’ or ‘any occupation’ definitions is sure to have a higher declined figure simply because these rubbish definitions invite a rejection.
The other area requiring a shake-up is the ability of closed-book companies to totally ignore requests for their claims statistics. Yet again, the public perception is that because they are closed to new business, they have no interest in playing fair and that the statistics might support this, even if this is not the case.
No: David Barnett, principal, DPB Independent Financial Services
Today the bulk of the insurance industry has released claims statistics for their income protection products, leaving the laggards that have decided not to reveal figures in a sticky position whereby they are viewed through jaundiced eyes for holding out.
Some argue that there is not yet any clarity on what actually constitutes a claim or a declinature and this is perfectly valid. Unfortunately, consumer and adviser perceptions will centre on concern that the figures must be dire if a company refuses to publish them.
Simply reporting percentages of claims accepted or denied is insufficient. For example, Company A may decline 130 of 1,300 claims, whereas Company B may reject 3 out of 25. In percentage terms the statistics for both companies appear similar, yet the 130 declinatures for Company A is deserving of far greater scrutiny and therefore far more information is needed to explain matters.
Much will also depend on the claims definitions favoured. Any provider with a history of offering ‘activities of daily living’ or ‘any occupation’ definitions is sure to have a higher declined figure simply because these rubbish definitions invite a rejection.
The other area requiring a shake-up is the ability of closed-book companies to totally ignore requests for their claims statistics. Yet again, the public perception is that because they are closed to new business, they have no interest in playing fair and that the statistics might support this, even if this is not the case.
