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According to recent research there is mutual distrust between insurance companies and customers, with customers thinking that insurers will do everything that they can to get out of paying a claim, and insurers thinking that customers will do all that they can to get money off them, even if under false pretences. The research was carried out by Defaqto whilst trying to determine why there had been such a fall in interest when it came to income protection insurance cover.
Income protection insurance is designed to pay out in the event that the consumer loses his income for a period (based on circumstances), but sales of this type of cover have fallen behind other types of cover such as mortgage payment protection insurance and critical illness insurance cover. According to one of the researchers involved in the study a mistrust of insurance companies when it comes to paying out has been a leading cause in this drop of sales.
A Defaqto spokesperson stated: 'The insurers we deal with have this view that people don't want to get back to work when they are incapacitated. It means that they insist on complicated processes that the public views as a way to reduce pay-outs.'
He also stated that different insurance companies use different methods in order to determine how much to pay out, and there was no standardization, which seemed to be part of the issue.
An official with Lifesearch stated: 'There is a problem because insurers use different definitions of occupations to work out risk. Two occupations that seem very similar can be rated as very different risks by insurers, and premiums can shoot up. A degree of standardisation would be welcome.'
Tom Smith
07.06.07
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