Appreciating understated value
While there is a great interest in the determinations that we feature in our newsletters, sometimes it may seem that the industry only faces challenges.
While we know that this is not the case, we sometimes need to hear about success stories from the industry. So let’s make a difference in people’s lives with positive messages as there really are enough sad and negative stories around us.
Disaster strikes
Liberty recently released its 2016 claims statistics. In attendance was Lisa Ashton who gave a moving story of how her adviser changed her life.
When Ashton was diagnosed with Stage 2 Breast Cancer, she was only 35 years old. At the time, she was raising a young family which consisted of a husband, two children and a foster child. Following her diagnosis Ashton gained a new appreciation for her financial adviser.
Necessary decisions
Ashton and her adviser reviewed her financial situation in 2004. He advised her to increase her life cover and medical scheme benefits, and in March 2005, Ashton’s dread disease policy became active.
The very next year in March 2006, 17 days before Ashton’s 36th birthday, she called her financial adviser again.
“After my diagnosis, one of the first people I called after speaking to my family was my adviser. I wanted to know if I was covered. He informed me that not only do I have the right medical cover in place, I also had a dread disease policy,” said Ashton.
According to Ashton, her adviser handled everything to do with her claims with limited interaction required from her. This gave her the time to focus on fighting cancer, dealing with the treatments and looking after her family.
Food for thought
In 2016, Liberty paid out R4.3 billion in valid claims, 13% more than in 2015. This amounts to R17 million every working day.
Speaking at the launch of Liberty’s 2016 Claims Statistics, Henk Meintjies – Head of Risk Products at Liberty – said that the insurer found that there is definitely a correlation between tough economic times and increased instances of fraud.
Before we continue, it must be pointed out that Liberty paid out 91.8% of claims in 2016.
“Economic pressure leads to more valid claims. However, policyholders are also taking a chance. After receiving the claims statistics, we found that 0.3% of claims that were considered fraudulent were for conditions that were specifically excluded in their policy,” said Meintjies.
Other forms of fraudulent claims also provide food for thought. According to Meintjies, 1.1% of these claims may be lodged by people in the hope that it would slip through the cracks and go unnoticed. However, some are because policyholders did not disclose that they had a specific condition and thought that it may be covered.
The highest incident however, 6.8%, goes to policyholders who lodged claims, but did not meet the minimum requirement for the claim to be paid out. For example, a policyholder may break a hip and would have to be absent from work for a month before they could claim from their income protection policy. If a policyholder goes back to work before this period, and yet tries to claim, they would fall in this category.
Increased claims
One aspect that insurers need to come to terms with is that during tough economic times, there will be an increase in claims.
“This could be because people have valid claims and are desperate for money. Let’s say for instance a person injures their back in a recreational activity and it causes him pain. Whereas he would have worked through the pain and not claimed during economic times that are not tough, we are definitely seeing instances where people are claiming for these types of injuries on a more frequent basis,” said Meintjies.
He also pointed to the fact that there has been an increase in suicide claims. One of the most frightening aspects of this is that in the Northern Cape, 10% of claims from that province are suicide claims which involve farmers. Whether this is due to the drought that we are in the process of recovering from is questionable, but highly likely.
There was also an increased rate of suicide claims from Mpumalanga and KwaZulu-Natal where policies were in their second or third year and past the period where families of policyholders were not able to claim.
Editor’s Thoughts:
Companies, and advisers, need to become more vigilant when it comes to claims. Increased instances of fraud will force insurers to look at claims under stronger microscopes. The last thing we need is for a valid claim to be turned down because it rides the borderline of being considered fraudulent. Please comment below, interact with us on Twitter at @fanews_online or email me your stories to jonathan@fanews.co.za.
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