Group risk can do better on claims data

The group risk industry can do better in the way it publishes its claims data says F&TRC director Ian McKenna

On 26th May both the ABI and Grid published paid claims statistics for life, critical illness and income protection plans during 2013.  It is a positive step to see the group risk insurance claim presented in this way for the first time. But on closer inspection it seems the group risk industry is not quite as good as the individual side of the business when it comes to playing out on critical illness and income protection policies.

Whilst the individual market paid out on 91.8 per cent of critical illness plans, the group market managed only an 81 per cent payout. Similarly, whilst individual income protection insurance paid out 91.1 per cent of the time, group payments were only 82 per cent. This paints a less than flattering picture of the group market and I believe one that is unnecessary. If, as I am sure that there are good reasons for these variances, why can we not more clearly articulate them?

For example, if in the case of income protection plans early intervention can lead to an early return to work is and as a consequence no claim payment is made in a traditional way, could not such cases be reflected within the statistics?  

In the individual market many insurers split the summary of declined claims between those that have not been paid for reason of nondisclosure and those where the claim was outside the policy definitions. Disclosing which claims have not met policy conditions would appear a sensible measure for the group market too – could we not add to this the number of claims where early intervention payments were made?

My immediate reaction on seeing the Grid statistics was who will come out first with some better numbers? I didn’t have to wait long. Within 24 hours Friends Life had published their data identifying that they paid out on 86 per cent of group critical illness and 95 per cent of the group income protection claims. Clearly a considerably better performance.

Publishing claims stats is an emotive issue in our industry but we should bear in mind that consumer perception is that far fewer claims get paid. A study by the Protection Review in 2013 revealed that on average consumers believe that only 38 per cent of life claims get paid. Against this background is it any wonder that the protection gap is so large.

Friends Life must be commended for having the bravery to break ranks. In doing so it has made it possible for anyone writing a rectified recommendation for their group critical illness or group income protection plans to state that “Friends Life’s track record of claims payments in 2013 was significantly ahead of the industry average for such plans”. I would imagine that such a statement could have a significant influence on many employer when selecting or reviewing a provider. Asking a client it they would like an insurer with a good record of claims payment will usually only bring one response.

Simple mathematics suggests that Friend Life cannot be the only group risk insurer who could make such statements, yet so far no other provider is giving such support to their sales teams or advisers.          

Publishing detailed claims stats means people can use them to create positive messages.  

If we treat claims payment history as individual company secrets, is it any surprise that consumers believe the position to be far worse than it actually is? Given the huge effort to which insurers go to pay claims, should we not be proud of our actions and make the information readily available? 21st-century consumers expect to have such data available to them online instantly when taking key decisions. If the group risk market cannot rise to the challenge of making its claims data easily understandable online it risks being increasingly being seen as the poor relation of the individual market.

Having taken the first tentative steps towards delivering a better message on its claim payment record the rest of the group risk market should not just follow Friends Life’s lead and make individual companies claims stats readily available but should look to build on this process to find ways to make a richer set of claims data available.