With the release of it's new White Paper; 'The Value of Protection', the AFA has partnered with BT to first try to understand and then ultimately address negative perceptions of the life insurance claims process. Brad Fox, AFA CEO, believes that this white paper is vital in beginning to rectify Australia's huge underinsurance problem.
Video transcript below:
Anna Temple, Wealth Professional Online
Anna Temple: With the release of its new white paper last week, “The Value of Protection”, the AFA has partnered with BT to first try to understand and then ultimately address negative perceptions of the Life Insurance claims process. Brad Fox, AFA’s CEO, believes that this white paper is vital in beginning to rectify Australia’s huge underinsurance problem.
Brad Fox, CEO, AFA
Brad Fox: For a number of years now the AFA have been doing white papers and we think it’s an important part that we need to play in thought leadership. This particular one is in an area that hasn’t been studied or examined before in Australia and that’s around claims. One of the reasons we have wanted to tackle this, is that the underinsurance problem in Australia is of enormous proportions and not much has changed in the amount of underinsurance for a number of years, particularly relating to income protection. There are new answers in here that we thought, were worth testing.
Anna Temple: The AFA firstly discovered that there is a considerable gap between the consumers expected claims journey, normally a time consuming and adversarial one and their actual experience. Fox believes advisors have two roles, to emphasise the many positives of the claims process, when suggesting Life Insurance to a client and then to facilitate a relationship between the client and claims manager, if and when a claim is made.
Brod Fox: One of things that we found and this was, this is now irrefutable, is that there is a large gap in expectations between what people expect to experience in a claims event versus the actual experience when they claim. So if I simplify that, there is a lot people not buying insurance, Income Protection Insurance because they expect the claim process to be too difficult. They expect the amount of paper work, they expect the interaction to be far too hard to deal with. They expect that it would be an adversarial relationship with the Insurer to try and get the money. What we found when we talk to people that had been through claims is that wasn’t the case at all. In fact the client’s experience was a positive one and there are implications here at all levels across the industry whether we talk about advisors, whether we talk about product providers or consumers. From the consumer point of view we need to debunk this myth that Insurance is all bad news. We need to get a message to them that, when you buy the promise, when you buy that promise of an Insurance contract, you will be paid out at claim time. We need to get the advisors to make sure that how they showcase the claims process at the time of dealing with the client, to get them to take up Insurance, it’s a positive experience. Not that they are there to work with the Insured against the Insurer to get the money because the evidence is the insured does get the money. So, it’s therefore about how they help provide a holistic claims experience by getting a relationship going between a claims manager and the Insured.
Anna Temple: Finally, Fox says the implications of this paper are broad and far reaching, although this is just tip of the iceberg, with calls for an industrywide bench marking study sure to follow. However, it is definitely clear that a holistic support approach to the claims process, with advisors collaborating with both parties as early as possible is in everyone’s best interest.
Brad Fox: Insurance claims that take a long time where there is a benefit paid for more than six months, we have a rapid escalation in the likelihood that person won’t return to work or will be a very long income protection claim. So early intervention on a holistic approach basis has the probability of shortening claims. Now that’s a great outcome for the Insurer financially, but more importantly it’s a great outcome for the consumer. They want to return to work, you want to be valued, you don’t want to be stuck at home, you don’t want something like a physical injury to become a mental health claim, because of the loss of sense of self worth, the difficulty of adjusting to a new life, the way you change the perception of your friends and your family. So this early intervention from a holistic approach and it takes emotional intelligence in the claims process to do it, has a win win for everybody.
Anna Temple: This is Anna Temple reporting for Wealth Professional Online.