We live in interesting times. The spectre of the global financial crisis hangs over us and not a day goes by where I don’t hear people asking: “How will this affect me?” In the insurance world, the commercial ramifications are clear and it’s a case of when and to what extent the claims experience will deteriorate. Talking to colleagues in the industry, this is a hot topic.
What should also be a hot topic, but is often neglected, is that at the end of every percentage point of claims experience is an individual human being who has been injured, is seriously ill or is a beneficiary to a deceased – and how the claims experience impacts on them is the most important part of the equation.
When I consider what it means to be an insurer, at the core of everything we do is the policy. It’s the document that sets out the promise of what we will do should the insured experience injury, illness or death. At the time of the ancient Greeks, where the word ‘policy’ comes from, it simply meant ‘proof of a declaration’.
As insurance has evolved, the policy contract has become a more substantial written document. These days it is sadly not uncommon to see unwieldy, and often unclear, policy documents. I confess to having seen one recently that is more than 100 pages long. While almost certainly not intentional, we have made these documents complicated. Whether we like it or not, this outcome has led to confusion and generated perceptions of mistrust and/or conflict.
In many instances, the importance of the policy is underestimated. The critical success factor for any implementation of group insurance, whether it be for a superannuation fund or a company, is not just the establishment of relationships and insurance cover, but the document on which all of that is founded, the policy.
In a recent tender presentation, I was asked by the trustee chair: “Andrew, usually when we think of transitioning to a new provider, everything is shiny, new, promising. And when we actually do transition our business, my experience is that it is a case of progressive disappointment. How are you going to disappoint us?”
Good question.
In the response I gave, and have given since, I have noted, among other things, the importance of a well-drafted policy document. This is far more than cleverly crafted words on a page. In insurance we take the premiums and make the promises. If the promise isn’t well structured and well understood by both parties, and is subsequently hard for policy owners and claims assessors to interpret, then we are together creating our own storm of trouble.
The biggest single negative perception of the life insurance industry is that insurers can be difficult at claim time. The Superannuation Complaints Tribunal (SCT) in 2007/08 received 649 written complaints regarding death benefits, disability benefits or insurance premiums. A small number in the context of the broader market, but these complaints are the tip of the iceberg, so to speak. They are the complaints that escalate to a serious level and haven’t been resolved by the insurer and policy owner.
If you are an employer or a superannuation trustee, your insurer’s performance at the SCT is an indicator of how well your relationship could travel. It is important to take the time to get the policy or the ‘promise’ well understood upfront and to discuss the insurer’s claims philosophy from the outset – the tribunal is and should be a last resort.
Where I work, we have learned this lesson and have for many years taken the approach that the policy document is the beginning of the promise delivered, not just the beginning of the promise.
We look for ways to pay the claim and go out of our way to avoid adversarial environments such as courts and tribunals. This way we ensure the human being feels reasonably treated, the employer or superannuation fund sees an element of care and empathy and, let’s be honest, who wants to fight anyway? As insurers it is our responsibility to think about making the promise well and delivering on it. That’s good policy.
