Latest Poll – Outsourcing Claims

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Our latest poll seeks your view on an emerging trend across the Ditch which is seeing more advice firms outsourcing some or all of their clients’ life insurance claims to external specialists.

In the Australian market, these external specialists are ‘of the life insurance industry’ and work closely with advisers and their dealer groups, as opposed to non-industry mainstream legal firms, many of which litigate against advisers in promoting a ‘no-win-no-fee’ offer.

These non-industry firms are known to sometimes charge a significant proportion of any proceeds following the outcome of successful claims applications, whereas the industry-based specialist outsource firms mostly comprise former life company claims officers and BDMs who have worked in and understand the retail life insurance space.

These industry-based outsourcing offers are experiencing growing engagement from advice businesses seeking to hand over some or all of their clients’ claims for three key reasons:

• The ever-growing complexity associated with submitting a claim and achieving a successful outcome for the client, especially given the sometimes lack of expertise possessed by non risk specialist advisers and generalist/holistic practices
• The prolonged delays associated with many claim submissions and the associated time, resources and effort required of the adviser and support team members
• Mitigating any potential action brought by non-sector legal firms engaged by the client, where the advice business or dealer group may be subject to litigation over the role it played in a declined claim outcome

Some of these key factors already exist in the Kiwi market, but not to the same extent as that experienced in Australia, especially around the potential litigation issue.

But consumer sentiment and the industry itself is undergoing constant change and only time will tell whether the trend of outsourcing life insurance claims management will emerge on these shores to the extent it already has in Australia.

If and when this trend gains traction in New Zealand, where would you stand on the question of the possibility of outsourcing your clients’ claims to an external industry specialist?

Tell us what you think and we’ll report back next week.