Speaking to Risk Adviser, Chris Unwin Training and Consulting Services director, said advisers believe in order to act in a client’s best interests they need to recommend the best products.
“Risk advisers that I speak to are paranoid about whether they are recommending the best product or the best company,” Mr Unwin said.
“The answer is it doesn’t exist, because it is crystal ball gazing. We are only going to know what the best product is when something happens to them,” he said.
Mr Unwin explained if advisers spent more time focusing on the types and levels of cover there would be a much better insured population.
“When push comes to shove the sum insured makes the financial choices it is not the flag you fly over the product,” Mr Unwin said.
“I would go as far to say that 95 per cent of all legitimate claims would be paid by any of the products offered by any of the five major companies, because [the] difference [lies] in a subtle definition,” he said.
Mr Unwin pointed out if advisers use a methodology where they find out what a client wants covered and makes recommendations based on what types and level of cover they’d have to achieve those outcomes it would lead to better outcomes during a claim.
“It is where you are suggesting to clients what they need that you are potentially creating a mine field for yourself,” Mr Unwin said.
“But down the track [if a] claim comes along and as it turns out they are underinsured well then they can actually turn around and say ‘Well this isn’t what I told the adviser what I wanted, it is what the adviser told me I needed’,” he said.
Agreed, Zurich have an agreed value IP we can substantiate the income at time of application, but Zurich want ten years full financials for the trusts etc. Zurich do not honour the word agreed value IP do they Tony?.
Great article, Clients want or ,what they need? I once had Elise Saunders from AIG congratulate me for having a client properly insured, yes he had IP, BE TRAUMA, LIFE AND TPD. HE had throat cancer and AIG were fantastic, even when they could have declined the claim they just paid. However Zurich’s IP claim, they wanted 5 years financials, Even after Senior Underwriter Brett Turner accepted the IP with full medicals of 20 years, with some financial evidence, for an agreed value IP, the insured was a financial planner the only adviser in the practice producing $300,000.00 a year, the income was distributed via a family trust as per the trust deed and Zurich want 10 years financial evidence, proving he was the sole producer or a producer of income, proving a distribution to him, well they will not honour it. all clients are interested in is being paid however a planner of 40 years agreed value wants 2 months payment and Zurich refuses, be careful with whom you place your clients.
Serving a clients best interest is not just about providing a product which is assumed to provide the best definitions. The problem is all products have strengths and weaknesses in their definitions and who knows what type of claim will occur? In making a recommendation Advisers should consider their clients circumstances, a product that is fairly priced with strong definitions (i.e. most likely to pay a claim) and also the Insurers underwriting philosophy and administration support. (No point in having a product with great definitions if the underwriting and/or administration support is poor). Last and most importantly, determine the Insurers claims management philosophy. It is a combination of all of these factors that should be taken into account when selecting an appropriate Insurer and/or product.
Most quality advisers do have methodologies “to find out what a client wants covered ” but to rely solely on those instructions without addressing an obvious problem the client till does not want covered, and without discussing it with the client and covering off in the SOA, is an invitation to be sued by an ambulance chasing lawyer, in front of a judge who thinks the poor client needs help. As judges are prone to say, we are the professionals, and we are paid for our advice
I cannot agree with the comments on not having to find the best product. Theres a few words omitted from that statement – “in the client’s circumstance.” AS to the statement re 95% of legitimate claims from 5 companies , “I beg to differ. If I have a self-employed 35 year old female professional in front of mean I cannot recommend an insurer with the standard pregnancy exclusion, an overseas travel restriction or a CAPABILITY CLAUSE. The latter issue takes out 5 of the companies on the market, and I suspect most of those would be in Chris’s top 5
And everytime I hear a BDM use the word “legitimate ” in terms of claims I need to restrain myself. One mans legitimate is another man’s bastard.