May 22, 2019

Transparency Is Key: Inventor Of Income Protection Announces Number Of Claims NOT Paid Out In Q1

Following on from the recent COVER claims Convention in London, Income Protection provider, Holloway Friendly, is aiming to lead the way regarding transparency in the industry. They have released the top reasons for claims as well as confirming that 6% of claims weren’t paid out during Q1 of 2019 and the reasons why.

The team at analysed claims data to find out the top reasons for income protection claims made in Q1 of 2019. Although 94% of claims were paid in Q1, the team also looked into the 6% of claims that had been declined and explored what could be done to reduce this figure in Q2.

After looking into the most common causes for claims in January to April of 2019, it was found that the following reasons topped the list:

1. Accident & injury – 39%

2. Musculoskeletal issues – 24%

3. Viral illness (colds, coughs, viruses, infections etc.) – 9%

4. Mental health issues – 7%

Holloway Friendly saw 20% more accident and injury claims in Q1 than the average reported by AFM in 2018 due to the short deferment periods that are in place, allowing them to pay claims for even minor injuries, as they offer week one cover to all occupational classes. These types of deferment periods tend to be favoured by occupational Class 3 and 4 workers (e.g. those working in more manual roles like construction) so they receive an increased amount of workplace injury or accident claims which prevents their members returning to work.

6% of claims made in Q1 were declined, with the top reasons for these rejections being ‘non-disclosure’ and ‘no loss of income’.

An assessment process undertaken by a team of highly experienced Claims Specialists allows Holloway to identify where members had withheld information, either knowingly or unknowingly. Any instances where claims shouldn’t be paid out are looked into by the team to better understand why this may be the case. From this analysis, it was uncovered that 4 in 5 non-disclosure decisions were due to errors made by members and advisers during the application process. Members not taking reasonable care, not fully understanding parts of their application or the impact of inaccurate disclosures or, in one case, deliberately withholding information, were the reasons for these non-disclosure decisions.

This information has been immeasurably useful and has enabled Holloway Friendly to adapt how they collaborate with advisers to reduce the number of avoidable errors made during the application stage. Providing advisers with a greater volume of learning materials and listening to feedback from members will slowly reduce the number of non-disclosure claims.

Alongside this action, a new tool is being created to ensure that advisers can gather completely accurate income details from clients. This makes certain that members receive the correct insurance for their needs and prevents rejection due to over-insurance. Holloway Friendly hope to release this tool on to their website within the next month.

In some cases where a non-disclosure decision was reached, the terms are amended as if the information was correct from the outset, putting the member in the exact position they would have been if disclosures were made correctly, meaning that Holloway Friendly have still paid the claim and living up to their mission of being there for their members when they them the most.

Suzy Esson, Head of Operations at Holloway Friendly, commented on the claims data from this year:

“Transparency is absolutely key and we’re committed to changing the approach of societies in how they present their claims stats. It’s important for people who may be looking to get income protection or for our advisers who want to sell our product to know exactly why claims aren’t always paid out and what we are doing to reduce this from happening in the future.

“Mental health continues to be a talking point in society and we hope that, with time, we will see the number of claims made because of this reason decrease. People are being more open about their wellbeing and I think we’re all now realising that our mental state is one of the most important parts of us that we need to be making time for. Hopefully we see this 7% decrease in Q2.

“We also, as a society, have a responsibility to make sure that our members are receiving exactly what they need and that everything is clearly explained to them. Our underwriting process is something we are incredibly proud of and we encourage a strong relationship between advisors and their clients to minimise the chances of rejected claims. With our new tool, we hope that declined claims numbers reduce even further in Q2.”

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