I often hear from my colleagues and providers about using electronic applications. Often phrased with the comment, “With what you do with technology, it is surprising you do so much with paper?”
Interestingly clients are also often surprised with the paper too. Maybe there is too much and more digital could be included. We will see.
Frankly of everything I do, the application form is the most difficult part of the whole process for clients. When we are in an environment where things are being simplified, insurance applications have got more difficult.
The point of this post is to explain my reasoning for the paper approach, and it is all about you the client. It would be far easier for me to go fully digital, don't misunderstand that.
So why the paper. In simple terms less misunderstanding, less non-disclosure and more claims paid. Yes, it is my professional view more claims will be paid using a paper application process.
One of the major issues with claims is non-disclosure. This is the missing out of information that could be relevant to the assessment. Back in the days of high-interest rates and simple application forms, insurance applications were quite lax, certainly compared to now.
Insurance companies are more stringent on medical information than potentially they used to be, for several reasons. Investment returns are lower than they once were with high-interest rates, product definitions are much broader and force payment more often. This means insurers need to be more diligent on assessment of risk to only pay the claims they should be to balance the books.
Yes, I know, pedantic insurance companies avoiding claims is your first thought. Yes but no. Avoiding claims that should have been excluded or have an increased premium for the risk is the point.
This does affect you, if the insurers do not manage this, your premium costs will increase at a higher rate than they presently do. This applies to all insurers, so thinking you can swap and move for a better deal on this basis could be somewhat challenged, if the insurer you swap to doesn't manage it, or you will be exposed to more pedantic underwriting.
Back to the paper.
The reason for the paper war is the paper application form gets more disclosure. It is this disclosure that ensures your cover will work. Second to deciding on the right cover, the application form is the most important part of the whole process.
Most insurance company application books, yes they can be, run to 35-40 pages. Sometimes this is per life assured as well.
You usually don't complete all pages as there are many additional forms, though sometimes we get a client where the book needs fully completing and sometimes extra pages are required.
This is the point, you will work through an application on a screen that is a page or three, but working through a 40-page book is not the easiest thing to do on a screen.
I have had clients that have come to me with policies, which have been done with another adviser, using an electronic application form, and we have found significant non-disclosure.
When we have looked at the process and the forms used, it has been easy to see where they got it wrong. Yes, the client got it wrong, because often they did the forms themselves.
Some of the examples have been:
- The question was on the fold, just on the bottom of the screen and when they scrolled to the next page it disappeared off the top.
- The questions were not read fully, can happen with paper too, but missed because of brightness issues with their screen or the sun on a tablet.
- They ticked the wrong box and didn't notice. Fat fingers and small boxes on screens, touch and normal screen mouse selection too.
- Time, interruptions while filling things in, skipping questions because they lost their place.
These are all really easy things to mess up, especially if you are doing it on your own and you get interrupted with kids, visitors, phones and life.
Which is why the paper one is more effective, you know which page you are up to. Cognitively you can scan and remember your spot much more effectively than on screen.
What has been a surprise this year, has been the things that still get missed. I have had a couple of very diligent clients that have had significantly better levels of disclosure than many, and they have still missed things.
For one, these came out at claim time. Fortunately, the insurance company could see that they had been extensive with their disclosure. The missing information, while directly relating to the claim, wasn't sufficient to cause a decline of the claim. Which is a great outcome, though it did cause the process to slow down as further doctors notes were required.
It also concerned the clients that they may be painted as dishonest or have a black mark for some reason. Maybe with general insurance, but not here. It was a genuine mistake of recollection, and it is understood that things do get missed. The point is what is reasonable to be recalled.
With another, some follow up on a forgotten condition, while not significant in itself, returned doctors note that suggested there was something possibly more sinister at play. The situation was a very normal low iron situation, but the doctors notes did not explain what was going on.
This last one is a bit of an issue, as doctors often make short notes on a symptom, don't expand on it and then include them in notes to insurers and other specialists. The issue is the insurer, not being medical and is risk-focused, take a more extreme view of every situation.
Something as simple as fatigue mentioned in doctors notes can mean many things. Are we dealing with leukaemia, stress and depression or is it something more benign like the baby has had an ear infection and kept mum up every night for the last week, or a simple and very common iron deficiency than needs iron tablets... Without context and perspective, the insurer just does not know so they will assume the worst case.
This is why disclosure is so important. If I could, I would insist on a copy of the full doctors notes with the application; then we would have fewer disclosure issues, and fewer claims declined.
However, we would see. More exclusions and more increases in premiums as risks would be more effectively identified and priced. Paying a bit more for the cover that you know will work is far better than finding it will not work at all at claim time.
One of the more recent developments in insurance, particularly with the banks, is to not ask any medical questions. This works by excluding all conditions prior to application, which means you do not really know what your cover is until you have to claim. I too have access to these products in my DIY section. They have application with the very very healthy and usually young but have some significant fish hooks too.
It is said you can have cheap, quality and service, but only two of the three at a time.
The same applies to insurance, cheap and quality, but no service. Quality and service but it is not cheap, cheap and service but the quality will fall short.
So do you want it simple and easy and have some very real uncertainty about your claim or would you rather have the comfort that your policy will support you when you really need it to?
I prefer the later, if you do too, get in touch, and we will do the hard yards to get you the cover you need that works. While delivering you quality & service at a competitive price. We do not do cheap because we do not do nasty.