View more on these topics

Helping clients understand decisions

Over the past few years, the protection industry has made a lot of progress in addressing the issue of consumer trust, in particular by reducing the number of declined claims.

This work is now bearing fruit, as evidenced by the fact that fewer claims are being referred to the Financial Ombudsman Service. This is great news for consumers and the protection industry.

But as we are unlikely to reach a position whereby the FOS gets no protection complaints at all, it’s good to see it improving its communications and using a consumer leaflet to explain how decisions about non-disclosure are made. The leaflet is well written, uses plain language and should help consumers understand the reasons behind insurers’ decisions about their claims.

As an industry, we could use the information in this new leaflet to good effect in other ways. Insurers might find it a useful checklist to ensure claims decisions are fair, first time and every time. This is important because when the FOS overturns insurers’ decisions, the perception is often that the industry was wrong to decline the claims in the first place.

Advisers might also find the leaflet valuable in helping to explain the need for clients to answer all the questions in the application to the best of their knowledge. In setting out how the FOS goes about resolving problem cases, the leaflet explains the rights and obligations of consumers. It states: “Insurance companies are entitled to know about a consumer’s medical history so that they can properly assess the risk they are insuring. Insurance companies should ask clear questions when a consumer applies to take out an insurance policy with them. And consumers should answer clear questions from insurance companies to the best of their knowledge and belief.” Well put.

Although we know it’s not true, some consumers think insurers trawl through medical records to find those proverbial ingrown toenails to use as excuses to avoid paying claims. But the leaflet explains that insurers can only turn down claims if the omitted information is material to the risk involved. This might reassure some potential clients.

It also contains helpful information about the role of brokers in the application process. It explains that when brokers deal with a number of insurers, they are acting for their clients and are responsible for passing information on to insurers.

One inference is that brokers could be held to account if this doesn’t happen. This is why advisers should ensure their clients answer questions to the best of their knowledge and have the opportunity to check relevant information at a later date. If your clients do this they can be sure their claims will be paid. If necessary, the FOS will guarantee it.

Recommended

Tie-up allows BDS to launch insurance arm

BDS Mortgage Group has launched into the general insurance market through a tie-up with BDML Connect. The group’s insurance arm, bran-ded BDS General Insurance, will have a panel of 12 insurers and these will be made available across BDS’ 134-strong network. The service will soon be opened up to all brokers using BDS, whether they […]

Don’t follow the UK buy-to-let herd out of fear – look abroad for better deals

We are all familiar with the old business adage ‘buy low, sell high’, but most of us don’t apply it to property investments. Latif Sayani, Mortgage Strategy columnist and managing director of Fuel Investments, often extols the virtues of UK buy-to-let, but I’m always left with a sense of bewilderment by his simplistic argument, which […]

Call to scrap commission

The Financial Services Consumer Panel is calling on the Financial Services Authority to scrap commission payments to advisers.But one broker says he has to earn an average of £1,250 in commission and fees on each mortgage to make it worth his while.The FSCP, which acts as an independent voice for consu-mers of financial services, says […]

Hazel Blears to head up DCLG

Hazel Blears has reportedly replaced Ruth Kelly as communities secretary heading up the Department of Communities and Local Government. Although the government has refused to confirm appointments, the BBC website has reported that Kelly has been moved over to the role of transport secretary while Blears, the MP for Salford, has taken over the government […]

Newsletter

News and expert analysis straight to your inbox

Sign up