How Claim Overpayment Leads to Product Innovation

Most mainstream news media are happy to tell people about when an insurer refuses a claim. They love it. Insurance companies are nothing more than mustache-bearing financial villains in their eyes.

Tuesday, July 27, 2021 9:21 AM

Russell Hutchinson

The truth is that most insurers pay so many people so much and fulfill their contractual obligations over and over again.

What a few people know is that they may pay more than they need to. It’s not a coincidence, it’s a choice. That may be correct.

Why do insurers pay more than the wording of their insurance policy requires?

This is a particularly valuable point given that there are stock issues to manage. Other policyholders may not be happy to hear that some policyholders are getting more than they should be.

But that makes sense. Take the innovation of a particular injury. This came about the insurer’s idea that the cost of valuation could be worthless.

If you know that an arm fracture takes an average of 12 weeks to heal, it doesn’t make much sense to evaluate the client three times during that period.

Don’t worry about what you “win” a little by paying them totals and recovering faster-it will be offset by the savings in valuation.

Another area where paying more can help is when early intervention is important.

For example, an insurance company introduced vocational retraining and support to some clients during the waiting period.

It’s clearly a common practice in their claim area, but it’s not (yet) reflected in all of their income protection language. They are not alone.

The message to the advisor is that the policy documentation is minimal and it may be possible to build a case where the insurer is willing to pay a little more and it is worth it to everyone involved.

But of course, this policy is still the ultimate return and you can’t rely on insurers always choosing to pay more. To do that, you need the benefit of committing in print.

tag: Claim innovation opinion Russell Hutchinson

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How Claim Overpayment Leads to Product Innovation

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