By Katrina Church, Insurance People

Have you ever had a claim come across your desk and immediately felt your heart sink because there was an exclusion on the policy?

I suspect some advisers have.

Sometimes that exclusion is entirely appropriate. It was correctly applied, it's still relevant and there's nothing that could have been done differently. But sometimes a claim prompts a bigger question: when was the last time anyone actually reviewed that exclusion?

A hidden issue?

Recently, we've been undertaking a comprehensive review of exclusions and loadings across our client base as part of our ongoing commitment to best practice and some of the results have surprised me!

Data from one of our largest insurers shows that 55.3% of our policyholders have an exclusion on their policy and the average number of exclusions per policy was 2.46. Given we always get additional disclosure from ACC claims histories, we have a significant number of clients carrying restrictions on their cover, but with further investigation and evidence we have been able to remove some of these exclusions as part of our review.

We spend a lot of time helping clients get insured, comparing products, discussing premiums and explaining policy wording. Yet once cover is in place, many exclusions and loadings simply sit there year after year, largely untouched. Clients move house, change advisers, switch employers or simply get on with life. They may have recovered from previous conditions, improved their health considerably since the policy was first underwritten or reached review dates that have long since passed. So conditions that were once considered a risk may have resolved entirely. Yet unless someone actively looks for these opportunities, nothing changes.

An insurer isn't going to ring the client and suggest removing an exclusion. The client often doesn't know to ask, which means it’s us as advisers who are in the best position to identify when and if a review is appropriate and push for it to happen.

Not all exclusions are forever

If someone has a permanent condition or a significant medical history that will always affect risk, an exclusion may remain for the life of the policy. But many others are linked to temporary circumstances. A client might have experienced a back injury before applying for cover and had that condition excluded while their recovery was monitored. Another may have undergone investigations for a health concern that later proves benign or recovered from a sports injury and remained symptom-free for years. In cases like these, there may be an opportunity to request a reassessment.

The same applies to loadings. Elevated cholesterol may now be well controlled through medication and lifestyle changes, or a loading based on family history may become less relevant with age. Those clients shouldn't necessarily be paying the same premium forever simply because nobody has revisited the conversation.

The value of ongoing advice

This is where regular reviews (tackled in my first column) become so important. Clients may not remember why an exclusion was applied, whether it was permanent or temporary, or even that it exists.

At reviews, advisers should be checking whether exclusions remain appropriate and whether changes in health or fresh medical information justify another look. We should also be explaining exclusions clearly at the outset and encouraging clients to challenge us if their circumstances improve.

Good advice isn't simply helping people obtain cover; it's helping them improve the quality of that cover over time.

Differences between insurers

Another challenge is that exclusions aren't always applied the same way across the market. Two insurers may view exactly the same set of facts differently. One may apply a very broad exclusion, while another may apply a narrower restriction targeted only at the specific area of concern. That distinction can become incredibly important years later if a client needs to claim.

Understanding those differences comes from experience and from being actively involved in claims and underwriting conversations over many years, which is another reason why advisers need to remain engaged long after a policy has been issued.

Can the industry do better?

I believe it can. As advisers, we should have processes to identify reviewable exclusions and loadings, whether through client reviews, internal registers or dedicated workflows. Insurers could also do more to highlight when exclusions may be reviewable, while we can better educate clients, so they're empowered to raise changes with us too. The exclusions review process varies greatly between insurers. So, while reviewing our clients’ exclusions, I’ve been challenging insurers about requesting realistic amounts of information. Encouragingly, I've seen a genuine willingness from some to improve their approach for the benefit of clients. Long may that continue.

This is a delicate area because not every exclusion can be removed and not every client will want those discussions revisited. Some conditions will remain permanent. Others may still present a level of risk that insurers aren't prepared to cover. But that shouldn't stop us from trying to identify the opportunities that do exist and tackling them head on.

So here’s my challenge.

Take a look at your client book this week. How many exclusions are sitting on policies that haven't been reviewed in years? How many premium loadings were applied based on information that may no longer reflect the client's current health? And what process exists within your business to ensure those conversations actually happen?

When an exclusion is removed, a loading reduced or a client's policy improved, the benefits can last for decades. It can mean broader protection, lower premiums and a better outcome when clients need their insurance most.

Isn't that exactly the value we should be delivering?