Julian Knight: The seriously ill shouldn't have to suffer insurers' prejudice
Sunday 13 January 2008
The reputation of the insurance industry has been tarnished by a long-running scandal. Some firms have made almost an art form of rejecting critical illness, life and health insurance claims, hiding behind the "non-disclosure" clause in policies. In English, this means that the policyholder making the claim can be turned away for having failed to declare something the insurer deems relevant.
Sometimes, the information not volunteered is crucial – a smoker claiming never to have touched the dreaded weed, for example. In such cases, rejection is justified. But all too often, insurers have used non-disclosure as a way to wheedle their way out of meeting legitimate claims from people who have paid premiums for years and are now ill and vulnerable.
Unsurprisingly, some consumer groups have concluded that the policies are simply not worth the paper they are written on. Some independent financial advisers, who can make a packet from the sale of these policies, try to steer their clients towards providers that have a good record of paying out on claims. But this underlines the dysfunctional nature of the market.
Now, as James Moore explains on page 13, the industry, through the Association of British Insurers, has pledged to stop rejecting claims on the grounds of trivial non-disclosure. What's more, even relatively serious cases may not end in outright rejection. Instead, claimants could receive a payment minus what is in effect a penalty.
This is to be welcomed. But the initiative is voluntary and, in order for faith to be restored, insurers need to change their mindset. They should remember that the claimant is innocent till proved guilty, not the other way around.
Barclays' top priority
The money story of last week was the fraudster who made off with £10,000 from Barclays chairman Marcus Agius. Having found Mr Agius's personal details, most likely online, he or she managed to order a new credit card in the boss's name, using it in a bank branch to withdraw cash.
Mr Agius has been reimbursed and "procedures reviewed". (If I were the manager of the branch or call centre in question, I'd be taking a more than usual interest in the job pages.) But I wonder how long it took to sort out this case of ID theft? I'm betting Mr Agius didn't have to spend hours on the phone to an overseas call centre trying to explain to lots of different people that he didn't spend the 10 grand himself.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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