{"id":36,"date":"2014-12-01T03:33:44","date_gmt":"2014-12-01T03:33:44","guid":{"rendered":"http:\/\/magazine.riskinfo.com.au\/18\/?p=36"},"modified":"2014-12-11T22:03:55","modified_gmt":"2014-12-11T22:03:55","slug":"claims-and-good-faith","status":"publish","type":"post","link":"http:\/\/magazine.riskinfo.com.au\/18\/claims-and-good-faith\/","title":{"rendered":"Claims and Good Faith"},"content":{"rendered":"
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Experienced NSW risk adviser, Mark Hoskin, has penned an open letter to Australia\u2019s life company CEOs, highlighting what he sees as a widespread and unfair practice at claim time, contrary to the spirit and \u2018good faith\u2019 that should exist in the relationship between the insurer and the insured\u2026<\/h3>\r\n<\/div>\n

December 2014<\/p>\n

Dear CEOs,<\/p>\n

Our industry is currently under intense media and regulatory scrutiny, experiencing a high level of consumer distrust. I hear senior executives talk about being client or consumer-centred and being transparent in what we do. Yet in one critical area, I don\u2019t believe we are \u2018walking the talk\u2019.<\/p>\n

At claim time, case managers have the option of requesting doctors\u2019 notes and Medicare and PBS histories for a claimant. This is a necessary and useful tool to protect the integrity of our industry where there are \u2018red flags\u2019 \u2013 signs of potential non-disclosure at application time. Unfortunately, this option is now the usual process for all<\/strong> claims where the policy has been inforce less than three years.<\/p>\n

Why three years?\u00a0 This is the time limit on voiding policies for inadvertent non-disclosure. Beyond three years, an insurer must prove the disclosure was intentional.<\/p>\n

The most vulnerable of an insurer\u2019s clients are its claimants. Yet it seems insurers systematically subject them to the most scrutiny when there is a chance to void a claim, within the first three years of a policy\u2019s life. I know of no insurer who requests the medical history for any of its clients within the first three years of a policy, except if the client applies for a claim. Then it is done, almost without exception.<\/p>\n

I understand this has been the status quo in the industry for many years, and it feeds the negative perception among consumers that insurers will do anything to deny a claim. This is not acting in good faith!<\/p>\n

I became keenly aware of this issue when a client of mine broke his arm in an innocuous weekend accident, entitling him to a six-week payment under the Specified Injury Benefit of his income protection policy. We provided X-ray reports, etc, to support the claim. However, as the policy had only been inforce for 18 months, the insurer requested authorities to be signed so doctor\u2019s notes and Medicare history could be obtained. The reason given was to \u2018validate the claim\u2019, or as the customer would see it, as a search for an unrelated non-disclosure to potentially void the claim and the policy.<\/p>\n

I have been told by various claims managers that the insurers deny a very small percentage of all claims due to non-disclosure. If this is the case, please stop this practice, and only seek medical notes where significant \u2018red flags\u2019 are raised. In this way our industry can be seen to be acting in good faith with its most important members, its customers.<\/p>\n

Changing this seemingly wide-spread policy will enable advisers and insurers alike to be proud of what our industry accomplishes.<\/p>\n

<\/p>\n

Mark Hoskin is Executive Director \u2013 General Manager NSW, Australian Financial Risk Management Pty Ltd<\/p>\n

Contact or follow the author:<\/strong> Website<\/a> | Email<\/a><\/p>\n<\/div>\n