I was recently asked by the good people who run Protection Review – a quasi-protection insurance think tank – to give my views on insurers and claims statistics.
In a nutshell, they wanted to know what I thought about claims figures now being published. Was it a force for good or bad?
I am a big believer in transparency right across the financial services industry – whether it is investment funds disclosing the companies they invest in (not just the top 10 holdings); the true charges investment houses levy for running their funds; or building societies and mutual insurers making available directors’ remuneration reports to all members (not burying them online to be stumbled upon as one insurer has resorted to doing).
The publication of insurance claims data has added to the appeal of financial protection insurance, although I know some insurers (and re-insurers) disagree.
By putting the data out in the open for all to see, it has dispelled many myths – some perpetuated by journalists like me; namely, that insurers routinely fight tooth and nail to decline claims.
Successful claims rates of 90 per cent-plus prove beyond reasonable doubt that most of the time financial protection does what it says it will do on the tin. Some insurance companies have enthusiastically embraced this new era of transparency.
Zurich, for example, not only publishes its claims data, but in giving the percentages for rejected claims, it also explains why it has played hard ball.
Examples are, the failure of policyholders to disclose key medical conditions prior to signing on the dotted line or making a claim within a deferred period only to recover within that timeframe.
“Our consistently high claims paid figures help to reinforce the message that we’re here to support our customers when they need it,” said Zurich’s head of market management Peter Hamilton in announcing its 2018 claims data – a successful claims rate of 96 per cent across its retail protection products.
Yet not all insurers believe in protection insurance transparency. According to Alan Lakey of Highclere Financial Services and CIExpert (a font of all financial protection insurance knowledge), some insurers with closed books continue not to play ball.
They include Standard Life, Phoenix and ReAssure. Others release the data, but it is obvious by the way they go about it that they would rather not.
Mr Lakey said all insurance companies should be required to publish their claims data on a regular basis – every six months.
This, he said, would result in true transparency across all providers. I am with him 100 per cent.
It is something the Association of British Insurers should insist its members adhere to. If not the muscle of ABI, then the strong arm of the Financial Conduct Authority should be applied.
While published claims data is a step forward, there are other things that could be done to improve the image and consumer-friendliness of the financial protection insurance industry.