Q&A: How to support policyholders post-Covid

The focus has perhaps been on the test case brought by the Financial Conduct Authority over business interruption insurance, and the subsequent challenges over 2020.

But there has also been a positive move towards healthcare protection products, with advisers citing a rise in inquiries in the first half of 2020 over life insurance, critical illness and income protection policies.

The pandemic has provided the impetus for people to consider their protection needs, but how can insurance companies and brokers continue to support these people in 2021 and beyond? 

Here to talk with FTAdviser In Focus is Peter Hamilton, head of market engagement for Zurich. 

FTAdviser: Are there any early indications of trends across the industry in terms of claims since the Covid-19 pandemic struck the UK?

Mr Hamilton: What we have seen, reflecting the broader reality and tragedy of the pandemic, is a huge number of death claims.

Last August, Zurich announced it had paid £15m in H1 last year alone. This is not surprising, considering the overall death rate in the UK has been going up so the life insurance claims reflect that, but it is why we are in business.

There will also be echoes of what we are seeing in the wider population. Covid will sadly have accelerated the deaths of many people with existing serious illnesses but here are a lot of extra deaths we have paid this year because of Covid. 

But in terms of CI cover, it is slightly different. The first quarter of last year was similar to the normal pattern, but from the second quarter onwards we saw a reduction in CI claims than we might normally have over the rest of the year.

FTA: Is the lower CI claim trend worrying, in that customers might not be getting the treatment they need?

PH: I’d expect to see some additional CI claims that haven’t been picked up this year because important consultations and diagnoses have been delayed, either because customers couldn’t access the right services or Covid-related fears inhibited them from seeking medical help.

In every interaction we might have with customers and advisers, we will remind them where possible to seek medical treatment, although there are inevitably limits to how far we can do that.

But we can see statistically that certain treatments and diagnoses - such as for cancer - have been put back during the pandemic. There has been a huge reduction in cancer diagnoses and treatments.

Typically, cancer would be the highest reason for claiming against a CI policy, so we think there will be a catch up over the coming months as people start to get the diagnoses and start to get treated.

FTA: What about the mental health of the nation? Has Zurich seen any trends relating to mental ill-health?

PH: It is clear that people's mental health collectively has been pretty badly dented by what everyone has had to go through. And we might start to see more income protection claims coming through for that in the months ahead.

But we and our competitors have interventions in place that can help. We also encourage people financially to tell us early. We have a deferred period when it comes to an IP claim and if someone is likely to make a claim, ideally we don't want to learn about this for the first time right at the end of the deferred period because it is harder then for to help them get back to work.

We do say if someone is likely to be in a deferred period, then if they notify us, we will waive the premium for that deferred period.

We also have a partnership with Hello Self, which has various interventions that can be made to help people get back to work.

FTA: Anyone can become vulnerable, as we have seen during this pandemic. What more can insurers such as Zurich do to help support people with mental ill-health and make sure people can get the cover they need?

PH: Some 98 per cent or so of the decisions we would have given before [Covid-19] we are giving now. There has not been a significant impact on the underwriting that we would see in IP, for example, but it’s an important area and we need to reflect more in how we ask the questions we do. 

Mental ill-health still accounts for a large part of the IP payouts. The Association of British Insurers is doing a lot to improve access to insurance for those who may have had challenges with mental health through new standards being introduced this year, and we contribute to and are supportive of the ABI's work.

We do already have training on how to deal with vulnerable customers for our own staff dealing with applications and claims; we have rehabilitation capabilities available not only through our link with Hello Self, but also through the counselling services we offer.

It is heartening to see how much the industry has worked with consumers and communities in a way I hope that will be sustained. 

We are also reviewing our wording in line with the ABI's mental health standards to see if we can make the wording easier than it already is.

FTA: Should the wider industry be promoting ancillary services more, considering that people could be using free GP consultations and free mental health counselling online through their cover?

PH: Definitely this should be done. It makes sense for people to use them where they can, so promoting these makes sense. Anything that we can do to encourage people to get the help they need, we will do.

FTA: What else are you doing to help clients at this vulnerable time?

PH: We have created as much additional flexibility as we can. For example, along with many others in the industry, we introduced the ability to defer premiums.

Initially we did this for three months in May last year but as it became clear that the pandemic was continuing, then, on a rolling basis, we have extended this additional flexibility.

This is not an indefinite premium holiday, and the take-up has been modest, which is a good thing because now, more than ever, someone's protection plan is important.

More than 50 per cent of people who came to the end of the three-month period have already paid [their premiums] back and this is encouraging, because it reflects a recognition that the client sees the value of protection insurance.

We also created more flexibility even with the deferred premium, to allow people to temporarily reduce their sum assured to decrease their premium, and then to restore it at a later time without underwriting

We need to make life easier at a difficult time.

FTA: Has Covid-19 made selling protection easier?

PH: People have talked about whether it will be easier to have protection conversations going forward. 

If you are an adviser, the idea that 'it won't happen to me' was historically a challenge to overcome in protection conversations. But I think those conversations will be just a little bit easier now, because people will feel vulnerable in one way or the other.

It is fairly tragic that this sense of fear has been necessary to reaffirm what they probably already knew in the backs of their minds – that they are not as financially resilient as they might once have thought.

FTA: How can insurers and brokers prove you are looking after the client's best interests?

PH: There is no doubt that some of the stories coming out on some declined business claims may have dented people's confidence.

It is hard for individual customers to differentiate between insurers when they hear a bad claims story, and they don't often differentiate between different types of insurance.

So there is more we need to do to restore that trust and faith. We need to highlight the importance of the volume of claims paid across the board.

We, along with rest of the industry, have paid billions of pounds' worth of claims over the past year, in general insurance and life.

Along with advisers, we should be hugely proud of how we’ve stayed open for business and paid claims that have made a huge difference to thousands of lives. 

Every time a claim is declined, no matter what for and who declines it, everyone in the industry suffers.

FTA: What has the insurance world been doing to help support the wider community during the pandemic?

PH: Over and above claims, we have been working hard to support people during this period. 

For example, one of our guys on the general insurance side had a 3D printer, and so made hundreds of pieces of PPE kit. Early on, Zurich donated 350,000 surgical masks to hospitals, hospices, air ambulance, police and health centres.

And we have contributed to the Covid-19 Support Fund, which was launched in May last year. The insurance industry has raised more than £100m, with £84m having been pledged in voluntary contributions from companies across the insurance and long-term savings sector.

All our partner charities have been contacted to see how Zurich's employees can support them with skills-based assistance, and our staff  are encouraged to use their three allocated volunteering days a year as an opportunity to support people and communities affected by the Covid-19 crisis.

This exemplifies this sense of engagement that the insurance industry has with communities. This engagement has been amplified by Covid, I think, and it is heartening to see how much the industry has worked with consumers and communities in a way I hope that will be sustained.

FTA: We have also seen a rise in online scams and rogue operators during lockdown, targeting people with insurance adverts. What is Zurich doing to help stamp these out? 

PH: These scams have been on the rise recently and it is a concern. We do share data and cases with others, especially where we have people ringing up purporting to be from Zurich.

This undermines the customer, the broker and the insurer, so we look to share information where these pop up. We will look into doing whatever we can do to reduce the scope for these scammers undermining brokers and customers, and to ride these rogues out of town.

Simoney Kyriakou is senior editor of FTAdviser