More automation could be the key to speeding up the bereavement claims processes, but this may not always be possible for group life claims.
This is according to advisers Health & Protection spoke to following today’s warning from the Financial Conduct Authority (FCA) telling life insurers to settle death claims quicker and improve how they monitor claims times or face further action.
The warning follows the regulator’s review of bereavement claims processes which revealed life insurance firms have more work to do in respect to poor and slow service.
Bereavement claims should be cut and dried
Naomi Greatorex, owner of Heath Protection Solutions (pictured), told Health & Protection death claims performance was “varied” across the market.
“I think more could be done always,” Greatorex continued. “A bereavement claim is a lot more cut and dried. We should be able to deal with them fairly quickly.
“I don’t see that we are dealing with them in a speedy enough way across the market.”
Greatorex added that automating processes could be the key to improving claims performance.
“People expect the money immediately when someone dies,” she continued. “If you’ve got life insurance, you expect to get the money really quickly.
“You understand there has to be some collection of information at the point of claim.
“People have had a life insurance policy for a long period of time, could we do more to automating payment in that area?”
Group life claims generally paid very quickly
While Karen Gittings, senior corporate benefits consultant at Titan Wealth Planning, pointed out that group life claims can be paid “very quickly”, this is not always the case where a master trust is involved.
“They can verify the death online two weeks after, as long as it’s from natural courses in the UK,” Gittings said.
“The insurer does pass on the benefit really quickly.”
But Gittings added delays can occur where the insurer’s master trust needs third party trustees to carry out their investigations.
“I would say in the case of where there is a insurer master trust, it can take anything from one to two months,” Gittings said.
“The discretionary trust requires the trustees to make thorough investigations to ensure that all dependants are provided for.
“And obviously these third party trustees don’t know these employees from Adam, so they need to verify this.
“And a lot of the delay is the next of kin and the relatives not getting the information back soon enough, but they’re bound by the rules of the trust to carry out a thorough investigation.”
Vulnerable customers
Emma Thomson, director of Emma Thomson Consultancy Services, told Health & Protection more needs to be done to increase take up of trust and beneficiary nominations which will help to speed up claims times as well as ensure the process itself is efficient so payments can be approved as quickly as possible.
“I think it’s good that the FCA is looking at the time to pay claims,” Thomson said.
“We do incredibly well in terms of the number of paid claims and the number of people who get a pay out, but the time to pay claims needs to be as quickly as possible.
“This is because these are vulnerable customers, so anything that can be done to help insurers improve their processes and make it faster is the right thing to do.”