This is the third section of our series recounting discussion from our April Protection Forum. This section focused on how claims stats can be better created and utilized to build consumer trust in insurance claims paying out. In our feedback from the session, 100% of our attendees found this section of the Forum relevant to their organisation, and 92% of attendees reported that they found the conversation useful to their practice. One attendee commented that they “really enjoyed the format of an open forum for discussion and debate”!

92%

of attendees found the session useful to their practice

Stacy Reeve:

We, the Association of Mortgage Intermediaries, last year conducted research with 5000 consumers and five hundred mortgage advisers. It was really to understand perceptions and try and explore the challenges that exist in that market. And one thing that really stood out from that research was trust, particularly trust around claims statistics.

So we found that 57 percent of consumers said that they didn’t trust insurer claims statistics, which got me thinking why that is and the psychology behind that. And is it the fact that we produce these figures? Does it make customers dubious in the first place? Because we don’t really publish those figures with other insurances like household or motor. So, really keen for this section to hear other views on that.

Matthew Chapman:

That’s a really important point, Stacey. I think what I’d like to say is I’ve had this discussion before because I want to take nothing away from the fact that claims statistics have been a really important advancement in our industry. If you look back at where we were 10, maybe 15 years ago and the claims stats we had back then, it’s been an integral part of getting both the advice community and providers very conscious of how claims are processed and improving generally the standards of how claims are processed.

And I think that we shouldn’t take anything away from the fact that that’s driven the market forward in leaps and bounds. I just think we’ve reached a point now where actually from a consumer psychology point of view, and I think Stacy raised a really interesting point. If I said to you, “98 percent of you’re going to win the lottery”, most of us are going to think that we’re in the two percent that won’t. And it’s kind of a weird thing to do with consumer psychology and the way humans generally process information. Because if you say to someone “95 percent of claims get paid,” most people assume that they’ll be in the five percent that don’t. And I think what we ought to be doing is, yes, whilst we should still celebrate the fact that you have extremely good statistics, we need to be spending a lot more time focusing on the five percent that aren’t paying out and why they’re not paying out, because I think there’s two reasons why it’s important.

One, because it’s an education piece, educating advisers and consumers why the five percent aren’t paying out and how we can potentially avoid it, because that’s the only way we’re ever going to reach the elusive hundred percent. But also, I think it’s really important to emphasise that often that the reason that those aren’t paid out are due to non-disclosure or potentially people not being truthful on their applications or people claiming for things that aren’t actually covered by the policy that they’ve taken out. So I think it’s really important if we focus more on that, both in terms of educating advisers and consumers, we might be able to build a bit more trust and actually get advisers to focus on the very reasons why these aren’t hitting a hundred percent. It’s just my input.

Alan Knowles:

So interestingly, I’ve seen a lot of responses when I’ve seen questions like this before in different sort of forums and different formats of how advisors use these statistics. And it’s really interesting because everybody’s so different. So there’s some folks who just don’t use them at all, there’s some who use them as and when required, i.e. if someone’s challenging them and saying “insurance doesn’t pay,” that usual sort of thing. And then you have some advisers who use them religiously with almost every single client.

So I think, you know, there’s definitely an aspect to say that these are being used, but it’s very dependent upon the firm, how the firm works. So we use the documents in training so all of our staff are set specific training to go through the documents, read them and write sort of almost a mini report on what they feel stood out for them. We find this really helpful. And we only use them when challenged so we wouldn’t send them to every customer. But they are really valuable to send to a customer who says, “you know, life insurance doesn’t pay out.” Well, not only can you convince them and tell them why that’s not right on the phone, but you can send these documents to them and it’s good.

And there’s some brilliant documents out there and  credit to everyone who does them. And I don’t mean to exclude anyone on this, but the two most recent that spring to mind are LV= and Legal & General. Just because I think they’re the most recent that hit my inbox and they’re really, really nicely laid out documents, very customer focused and just going on what Setul and Matt both said and I 100 percent agree. Each of them both cover, as do I think a lot of them and I think Zurich were probably one of the first ones to do this, the percentage that don’t pay out and why they don’t pay out. And then we use that as well.

So when you’ve got a customer who says this insurance doesn’t pay out, not only can we say why that’s wrong and why it’s a misinterpretation, we can say here’s how you make sure you don’t fall into that five percent or that two percent or whatever it is. Yeah, I guess I find myself agreeing with Setul and Matt with it, but just saying obviously they are useful and they definitely, definitely still have a place.

I think how the claims are used and what details are given is the job of the adviser. I might get some disagreement with that. But I think that that’s up to us. You know, we’ve got to give those examples. We’ve got to paint those stories as to how that could happen and why it doesn’t happen.

Matthew Chapman:

I’m keen to get providers’ different thoughts on whether things like included in unpaid claims statistics so where claims are rejected, whether claims for things not covered by the policy would be included in those figures because they can often be quite misleading. For example, if someone were to make a musculoskeletal claim on a critical illness contract, would that be included as an unpaid or declined claim? Because that would be potentially not really a legitimate claim in the first instance, and it might skew the figure slightly. It’s interesting to see how providers treat those kinds of claims and where they recorded in the statistics.

Peter Hamilton:

To pick up Matt’s point, which is a good one, is that clearly there’s a degree of assessment that’s done whenever we get a claim in. But essentially, as a crude rule of thumb, if we have to do some work on it and there’s any doubt at all with it, we’ll count it as a claim. So, for example, if we need any kind of medical assessment, that definitely counts. If someone came in and said they’ve stubbed their toe or maybe they’ve broken their leg, that might be a fracture cover claim, but it wouldn’t be a CI claim and we wouldn’t include that in the stats, because I think if we were to do that, then you just get very misleading stats, as Matt suggests.

For the majority of cases where we’ve got to ask more questions of the customer, where we might need any kind of medical evidence, then that would be included. So what we don’t do is ignore in the stats a claim that we might decline, for example, because the customer doesn’t, currently at least, meet the severity required for a particular definition. So let’s say it’s a prostate cancer case which doesn’t make the Gleason Test score required, that goes down in the decline stats.  The vast majority, where there’s any kind of question or work for us to do or information for us to get, we would evaluate and then either accept or decline, and reflect in the stats.

Scott Cadger:

I was just going to reiterate what Peter saying. It’s the same as Scottish Widows. We all look at a claim. And if you’ve got to do what you need, i.e. complete the claims form and start the process of assessment, then those claims are included in order to claim claims.

But as Peter said, if someone comes in with a stubbed toe looking for a CI claim, then it would be triaged out at outset and not included there. What we do on top of that is go through the cases that are triaged out to make sure there’s nothing more fundamental in the product that customers are not understanding. So we take a deep dive every sort of quarter or so to look at these types of customer enquiries, because there is a reason why someone’s picked up the phone and started the process in the first place to make sure we understand why that’s happening and feed that back into product design. As well as, into the adviser community to help them understand what’s going on there.

James Boyles:

Mine’s just a really personal take that was screaming at me whilst this point was being discussed, and it takes me back to when I started training with Woolwich Building Society in the 1990s and was sent on a company representative interview skills course. And we watched these old sales videos by the guy who did Robin’s Nest. He was the star of these sales videos.

Basically, what’s striking me is if 57% of people are saying that “I don’t believe the claims statistics” –to me, that’s a buying signal. And to me, that’s a question of an adviser’s skill to be able to turn that around to that customer, because I do think that that the insurers actually give us good stats and present it in a very clear way. But it’s a buying signal.

To me, you can just turn that round super easy on the customer and say, “What if I can prove those stats to you? Would you buy it then?” And actually test the water and see if that is their real objection? It’s a buying signal. So, to see it is a problem that the insurers need to solve, I think is wrong. And in this industry we think, “Do we ‘sell’ stuff?  No, I don’t ‘sell’ stuff. I’m an adviser. I help the client to make an informed decision.” So, OK, let’s help clients make informed decisions– they’re not saying that they don’t trust the stats, what they’re saying is “Give me a reason to buy it.” And that’s a mindset change.

Tobias Corden:

We do find the claims stats bits and pieces really useful and we do use them. And quite often we go back to the providers asking for additional information, either to perhaps match up to where we’ve got something else. We’re trying to make a comparison, which we then provide to our clients with additional information.

A recent addition that has been really useful, saying how the additional benefits are being used and what that’s now starting to do is where they’ve got more and more years worth of to compare, and especially with COVID, we’ve seen that influx perhaps where people taking more advantage of those remote GP services. But quite often, perhaps, it’s difficult to benchmark perhaps what the actual usage is for the number of policyholders that are ineligible to use, because it kind of would just be handy to know perhaps that the overview as to what actually is versus perhaps what the uplift has been in the previous year. But it’s been really good to start seeing that now coming from these claims stats.

Good to see that there’s a general view that what insurers put out is useful. Our stats for 2020 are imminent, and like each year we do cover what we don’t pay as well as what we do, as well as our average age and claims by waiting period and that sort of thing. Also, like Toby mentioned, this is about more than just the claim payout, but also including some stats on the value-added services and how particularly last year they were seen as more valuable than ever.

Just one point and one area I think that we could create a bit more consistency in the market would be in relation to how insurers report new claims for the year versus claims in payment from previous years. That’s something that we will provide to the ABI, so it’s readily available, but I think there are some providers that will provide claims statistics based just on the new claims for that year, while others will include claims that were still being paid from previous years. That can inflate the figures and it does make it a bit harder to compare like-for-like.