MLC’s defining moment

MLC Business Expenses has repeated its triumph in the business overheads category of last year’s Money Management/ Dexx&r Adviser Choice Risk Awards, the only company to do so this year.

MLC took out the gold medal in the category this year for much the same reason it did last year, the simplicity of its claims process.

“The way MLC makes it simple for our small business owners, which are primarily the market at which the product is targeted, is we don’t ask them to justify their earnings,” MLC head of protection solutions Greg Enfield said.

“A lot of our competitors would ask the insured client to justify not only the ongoing expenses of the business, but also to justify that the business has suffered a loss of earnings as a result of the disability of the business owner.”

Enfield said it can be a difficult thing to do for a number of reasons, not least because the claimant is disabled at the time and is “presumably more interested in caring for their health rather than searching through financial records”.

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“Secondly, it also takes time for a loss of earnings to emerge in the financial statements, and yet the business has a need for the cash flow to come from the insurance straightaway.”

According to Enfield, MLC also does not require clients justify a loss of earnings resulting from their disablement, thereby eliminating the difficulties involved in attributing the loss of earnings to one individual.

“All you have to do to qualify for benefits is demonstrate what the expenses in your business are, which is just a matter of showing your bills for such things as rent, property rates, car leases, electricity bills, salaries and so on.”

Another defining characteristic of the product is that it has the “leading definition of disability in the market, a definition that’s fair to the client”.

“Our definition of disability is the client needs to be unable to do at least one important duty of their occupation, making clear the criteria for a claim on benefits.”

Enfield said MLC’s ongoing simplification of its claims as well as other product definitions is aimed at making insurance more accessible for small business owners.

“Small business people don’t have a good understanding of the different types of insurance cover that are available to best protect income, business, and their wealth.

“In our experience, they are often unaware that there is a specifically tailored product for small business people, either self-employed or people that have small partnerships.

Tower Australia product manager, alliances, Tim Tez agrees that the business overheads category, in which Prefsure’s Business Expenses Gold is a silver medal winner, is undersold, even compared to other categories.

Formerly Prefsure product manager before its purchase by Tower in April this year, Tez said this underselling is typically due to the complexity of the product.

It is targeted primarily at the business rather than the personal insurance market, making it all the more important to have a consistent, understandable product.

Another reason underinsurance is so manifest in the category is “typically that business expenses are lower down the priority chain of the small business community, at which the product is largely targeted”.

“Often, a business owner will get income protection insurance at an agreed-value contract, which will cover their income but not, however, their business expenses.”

Tez said there has been a lot of tweaks and changes to Prefsure’s Business Expenses Gold product over the past 12 months but, in the interests of “providing product consistency for advisers and consumers”, no new additions.

One enhancement to the product is a further extension of a benefit that effectively extends payment of benefits to clients for up to two years, which allows a small business to get back on its feet if the owner is disabled.