Look twice at insurance applications
An insurance adviser says clients could be left vulnerable if others in the industry do not change their approach to completing policy applications.
Thursday, May 18th 2017, 11:53AM 
1 Comment
by Susan Edmunds
Anand Srinivasan, of Brisk Insurance, said his previous experience working for insurers – he was with AIA for nine years – had shown him that many declined claims could have been avoided if medical questions were answered properly at application time.
He said insurance companies’ application forms were often worded in a way that did not get to the basic information required.
“The first question on most application forms, for example, is, 'Do you suffer from high cholesterol?' Most people on an online application, with no one to guide them or caution them, will answer 'No' if they are not on medication. Theoretically right, but technically wrong. I typically rephrase the question for people. It really should be: 'Did the doctor ever ask you to exercise and diet to bring down your cholesterol?' Many would respond yes, even if they think they are okay because the doctor said cholesterol was under a certain limit and did not prescribe any meds.”
He said posing the questions to clients in different ways could help eliminate accidental non-disclosure.
“Think 'why am I selling this policy?' I always ask questions questions from the point of view of looking at a claim – what will I need to ask for this client be able to claim?”
He said insurers would take different approaches to how far back they wanted to delve in an applicant’s medical history. “But when a claim comes every insurer goes right back to childhood.”
Srinivasan had rewritten some insurance policies that had been clean skins but now had disclosures and exclusions. He said, despite that, they were now more solid policies that could be relied upon.
He said the potential for accidental non-disclosure highlighted the value of good advice from an experienced adviser.
"The trouble is, many people buying insurance online or through a bank don’t have the support they need to get this right. Many of these sales channels seem to encourage what we call 'inadvertent non-disclosures', probably to get the numbers in. People need someone to make sure that, if they suffer a heart attack 10 years down the line, they won’t have inadvertently not disclosed their cholesterol situation and miss out on their trauma cover."
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Even when there is good disclosure, insurers will go looking, if it's within the early days of a policy. Making the whole underwriting off the application, without requesting medical notes, double jeopardy for clients.
The upside when insurers are put on notice there are things that need further investigation and they don't request further information, provided the disclosure given was in line with the understanding of the situation, there are protections for clients. But this later situation is far less frequent.
Ubiquitous access to client medical information, with controls, is the only real answer for a public not fully understanding the extent of their disclosure obligations. Then we get the whole conversation done and dusted upfront and have far less distrust of our industry and our products because claims are less contentious.