TOO many financial firms fail to empathise with families trying to access an essential lifeline after a loved one dies, senior figures within the life insurance world admitted this week.
A high-level industry conference in London on Wednesday heard how bereaved customers are forced to jump through hoops to receive a pay-out on a relative’s life insurance policy, with the process taking weeks if they fail onerous security checks.
These problems have been compounded by multiple takeovers and company closures in the life insurance sector over the last 30 years, with customers often struggling to trace older policies.
One former insurance executive told The Protection Review that some companies show a “complete lack of empathy” towards customers at an already-difficult time.
Roger Edwards, previously managing director of Bright Grey and Scottish Provident, spent more than a month trying to get pay-outs on his late father’s life insurance policies last year, with one firm delaying the process by a fortnight after losing the death certificate and will.
Mr Edwards said he was locked out of one policy after he was unable to provide the correct address, forcing him to write to the insurer and wait 10 days for a claims pack to arrive.
“At no time during that process did I feel that company had empathy with me,” he said.
“I’ve worked in this industry for many years but I just wonder what it would have been like if my mother had to do that. She has none of the knowledge of this field that I have.”
The chief executive of an insurance broker said: "Some of the companies Roger’s father had bought from were no longer around and other companies had taken over the servicing of the older policies. It sometimes isn’t obvious who you should be calling to claim on policies and the new contact information isn’t readily available.
“It took a lot of time and effort to trace these policies, and that was for someone who works in the industry. That's an awful customer experience and it simply shouldn't happen.”
Mr Edwards, now an Edinburgh–based marketing consultant, believes this is one reason why life insurance and protection policies undersell compared to other financial products.
Income protection in particular is a little-known but potentially lifesaving form of insurance. It provides an income for people if they are forced to give up work due to an accident or illness.
Insurers now publish data that shows how much they pay out on life insurance and protection policies each year. The percentage of successful claims on these products is frequently more than 90 per cent, but Mr Edwards has previously claimed that some insurers want to stop publishing these statistics, something he said underscores the lack of empathy claims.
In a blog earlier this year, he wrote: “Customers think insurers don’t pay claims. They “feel” companies will find any way they can to weasel out of paying.
“Publishing claims statistics and trying to overcome those perceptions is one of the most important things insurance companies can do to convince the public what they do is good.
“Suggesting they stop publishing [these statistics] demonstrates a worrying lack of empathy with customers and will do more to convince them they were right about financial services and the industry does have something to hide.”
Kevin Carr, chief executive officer at The Protection Review, said some insurers are not convinced that positive claims statistics are getting through to customers.
“For most companies, it is little more than a press release sent out to financial trade newspapers,” he said. “Of course, this is not going to reach the masses. We need to be more joined-up and much smarter, with a proper budget, to really work on getting the numbers out there.”
A new lobby group is doing its bit to hold insurers to account. The Protection Distributors Group is encouraging companies to adopt its funeral pledge, which asks as a minimum that companies pay funeral costs where no other arrangements have been made up to the value of £5,000. So far, five insurers have signed up – Royal London, AIG, LV, Aegon and Zurich. Steve Marshall, chief executive officer of protection broker Reassured, is also setting a free protection policy tracing service to help other families avoid Mr Edwards’ experience.
“It will mean that anyone having to deal with administration at such an emotionally challenging time has somewhere to go to make the process far less cumbersome,” he said.
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