A claim, without a policy in place

One claim stands out for Rick Willis, because it was paid by an insurance company that didn’t even fully cover the client yet.

Monday, September 9th 2024, 9:27AM

For Rick Willis, one of his most memorable claims happened before the client’s policy was even in place.

Willis, national sales manager at Financial Design Group (FDG), says it stands out in his mind for a few reasons.

It involved a couple who were involved in a serious accident, which also affected their children.

At the time, they had begun the process of shifting their personal insurance cover to Partners Life, but the move was not complete.

They had submitted the application but not yet accepted the terms of the cover.

“The golden rule is that you don’t cancel anyone’s cover until you have something solid for them to go to,” he said.

The policy they were shifting to included interim cover that offered temporary protection for accidents while applicants were working through the process.

While relatively limited, this protection was offered automatically and covered certain risks until the policy was either fully in place or the application denied.

Crucially in this case, the interim cover also included the possibility of a trauma payout for the insured person’s children.

The man’s existing policy paid out for his injuries but it did not include any cover for the children.

“He was in hospital in the ICU…he would have been entitled to a benefit under the [Partners] accidental cover too, however he still had his other cover in place,” Willis remembers.

“But the trauma benefit extends to the children, up to $50,000, so we were able to put a case together for the children’s trauma benefit to be paid that would have existed under the client’s policy.

“The children sustained injuries… the significant thing about this was that it paid out when the policy wasn’t even in place because it had that clause in it.”

Willis said the client had been shifting cover because he wanted to reduce his premiums due to cost-of-living pressure.

The cover that he previously had, and that was yet to be cancelled, provided a higher payout amount than his new cover would have, so keeping it in effect while the transfer happened proved to be the right decision.

“If I cancelled that cover and left him with the new cover, he wouldn’t have got as much.”

The woman in the couple moved to the new Partners policy but the man stayed with his existing insurer because of the change in his health condition as a result of the accident.

“When you accept terms you have to disclose whether there have been any changes in health, occupation, income or family history.”

Willis said the fact that the couple had signed a direct debit form was enough to prove their intention to switch policies and the interim cover became available.

Willis said it was an example of how an adviser’s work could deliver a superior outcome for a client. “Advisers doing our job properly from the get-go. Too many advisers leave that part of the equation out, they’re too afraid to ask a client for their direct debit details.

“Advisers sell insurance solutions based on ‘we’ll put this up and see what comes back and when we know what we can get we’ll get the payment off you’ but that is putting the client at risk, especially if there is no cover in place.”

He said shifting from one insurance company to another could be tricky and needed to be done for the right reasons.

“You’ve got to have good reasons to reduce cover, premium is a big factor.”

But he said it was the adviser’s job to help clients get the best results from claims.

“Insurance companies make no decisions lightly, they’re always looking for ways to make a claim work and our job as advisers is to present the claim in the best possible way that allows the insurance company to approve the claim. We never leave clients on their own when it comes to claims, we know what’s required to make a claim possible.”

He said his team would make sure that a claim was fully prepared before it was submitted, with the “right boxes ticked”. Sometimes they would go back to the client to get more information before they took it to the insurer.

Willis said he had been in the business long enough to know that he personally was not necessarily the best person to process claims, deal with claims people and manage that administrative process. For that reason, he relied on his team to make it happen smoothly.

“I have a great big team – I get involved initially and arrange for the claim form and liaise with the client to help fill it out and get information before it gets lodged, with every claim we have got a very, very good process.”

In some cases, his team have been to court to help clients get claims paid. “It’s not all black and white in claims world, but [claims are] why clients pay premiums… they pay them because they want to know that when the rubber hits the road they’re going to be paid. Some companies are better at paying claims than others.”

He said he would stay in touch with clients along the way and again a month after their claims were paid.

“When you get a good outcome, you do get good referrals.”

He said it was “very, very rewarding” to see a successful claim. “I’ve been in business 35 years, and I don’t know whether it was good management or just good luck but it was 25 years before I had a death claim.”

The mix of claims was changing, he said.

“Death claims are on the decline because people are living longer. It’s the trauma claims, loss of income, those monthly disability claims increasing – mental health disability claims, lots of those – anxiety, stress, pressure.

“Trauma claims - cancer is a big one.”

He said while claims were the most rewarding part of his job, he was also focused on helping clients get on track from the beginning.

“Another rewarding part is getting the cover in place, helping clients make good decisions from the outset so when a life event occurs, insurance does exactly what it was intended to do.”

Tags: claims