Advisers – The driving force behind quickly paid valid claims

The insurance industry around the world is under unprecedented pressure in terms of speed and ease of paying out claims, and South Africa is no exception.

Any kind of insurer which makes its claims process ‘sticky’ can quickly find itself the subject of unfavourable blogs, negative social media chatter, rough commentary on talk radio and a rapidly amplified bad word of mouth. The situation is compounded by the ease with which service comparisons can be drawn online by consumers.

Financial advisers need to assure themselves that their clients are not only adequately covered but that the claims procedures of the insurers they recommend are quick and smooth. Otherwise, those advisers might become collateral damage from the failures of the insurer they championed.

Best practice insurance companies are now benchmarking their claims processes and making the results public. They are also constantly seeking ways of improving them, especially in areas like Temporary Income Protection (TIP) where self-employed or commission-earning clients urgently need money to cover the cash flow strains resulting from illnesses or accidents.

Brad Toerien, CEO of TIP specialists FMI, points out that the category demands quick pay-outs because it “exists to meet a temporary crisis for business owners and it’s no use if the money arrives after the crisis has passed.” The average TIP claim in South Africa is for 79 days.

Toerien says FMI sets itself some demanding timelines in its Service Level Agreements (SLAs) with a commitment to a maximum of 48 hours for the company to process on its side each of the three steps from the lodging of the claim to payment. Those three steps are Claim Lodged to Requirements Sent (24hrs); All Requirements Received to Decision (48hrs); and Decision to Payment (48hrs).

“Those are our SLAs but in most instances, we better them” adds Toerien “and even though we are handling complex medical issues which require some form of substantiation, we keep the process simple and transparent”. Offering high quality products, FMI underwrites upfront instead of at the claims stage. Along with a quick turn-around time, a comprehensive underwriting process at this stage secures the client’s claim, reducing the risk of a rejected claim.

FMI’s claims record for 2011 is 98.08% and the only delays which are acceptable within the FMI system are when the client is slow in providing all the required information. “It cannot ever be sluggish from our side,” says Toerien, “nor can our demands for information be onerous, unclear, or unfair.”

He believes that this new age of activist consumers, who compare quickly and complain vocally about service, has generally sharpened the game of insurers, “It has shaken everyone out of secrecy and complacency and placed an entirely healthy pressure on us all to deliver what the client ultimately is paying for – peace of mind and a quickly paid valid claim.”

Toerien says this also puts pressure on advisers to make sure that their clients are fully aware of what claims process is involved on any TIP they recommend, “The quality of both the cover and the way any claim will be handled are of equal importance in the long run.”