Negative coverage about legacy policies not paying out on a key condition; PPI mis-selling; the travel cover scandal and more. It is little surprise that the life insurance market continues to battle against negative public perception, with only 50% of consumers believing insurance companies will pay claims[1].
What’s more, insurers often don’t help themselves with complicated wording around conditions, which make it very difficult for consumers to understand what they’re covered for. The balance between wording that provides accuracy and certainty versus one that’s intuitive to the consumer is one which the industry continues to face.
And while many advisers see the real value of protection, having sold many policies that go on to pay out, many consumers appear to see little value in insurance, preferring to spend any discretionary income elsewhere. In fact, a recent report from Mintel suggests that over half of all people who don’t have insurance haven’t taken it because they either can’t afford it or they don’t want to pay for insurance they may never need[2].
One way insurance companies can help dispel some of these perceptions is through the annual publication of claim statistics. Going the extra mile when detailing claims paid out over the previous year is a positive trend within the industry and something that should be encouraged, as ultimately this will help to restore consumer trust. Tellingly, the most recent statistics reveal that payouts have indeed remained relatively high on Life, Critical/Serious Illness and Income Protection policies.
Vitality produced their first Claims and Benefits report in 2017. It not only details the claims paid during the year, but also demonstrates the activity our members have undertaken to improve their health and the value they’ve received back via our partners in return. Which, in our case, shows that through our partners and benefits, policyholders can get value from their Vitality policy even before they claim. For the record, we paid out £36.1 million in claims, at an acceptance rate of 96% across all products.
Introducing a welcome dose of transparency not only demonstrates a willingness to acknowledge there is an issue of perception to address, it also makes it easier for potential customers to find an insurer they feel they can trust and more easily see the value in protection. Echoing our shared value philosophy, this represents an outcome that’s good for consumers, good for the industry and good for society.
The publication of claim statistics is a step in the right direction. But there’s little doubt the industry still has a long way to go to redress what is, in many ways, an unfair perception. But a perception, which, unless urgently addressed, threatens to undermine the whole protection industry.
[1]https://www.insurancetimes.co.uk/only-half-of-british-consumers-trust-insurance-companies-to-pay-claims/1425151.article Insurance Times, 2017
[2]http://reports.mintel.com/display/880335/?highlight Mintel, 2018
Trust is important, a sentiment I applaud here.
Readers may be interested in my own experiences of a cI claim on 2 policies that had been going some 20 years https://bit.ly/3bIPJ4G