Why insurance needs to be on a financial planner's agenda

Simon Stanton explains why financial planners should not leave themselves out of the insurance claim process.

A common Australian greeting is ‘How are you going?’. But most people don’t expect a response to the question – especially when the person they’ve asked is experiencing health problems.

The same cannot be said for financial planners, who have a vested interest in being all ears when it comes to their client’s personal circumstances, as they may indicate potential eligibility to make an insurance claim or alter their financial plan.

AMP data shows that 70 per cent of insurance claims are notified by the financial planner. However, less than 50 per cent of planners actually work with the insurer on the claim.

Although planners take the time to recommend the right insurance product initially, many may not realise the importance of playing a part in the claim process.

However, helping clients during the claims process is fundamental to a planner’s role of ensuring the best financial future possible for their clients.

There are two very basic things a planner should know well: their client, and the product they have recommended.

The ability to both identify and manage a claim through to completion draws on their detailed knowledge of both. A planner’s involvement in a client’s insurance claim is therefore essentially an extension of their service to their client. It also adds an additional level of due diligence to the process.

Since the outcome of any claim could seriously alter or even derail a client’s existing financial plan, involvement in the process seems not only logical, but also vital.

Adding value

A planner should always be on the lookout for a potential claim event in their discussions with their client. A client may not recognise the significance of an injury or illness themselves, so the planner’s combined knowledge of the client’s situation and their insurance products is crucial.

For example, a client may casually mention to their planner over the phone that they recently broke their arm, not realising that they may be able to claim for this condition.

A planner can help the client understand their contractual rights in practice, not just when they recommend the insurance product in the first instance.

Secondly, the planner can make sure the client is prepared before they discuss their claim with a claims assessor by explaining the process to them, what is involved and making sure they have all the facts and information required for their first conversation with the assessor.

For example, the claims assessor may request accurate financial data to determine the level of monthly benefit for an income protection claim.

In this instance, the financial planner could help instruct the client’s accountant on these requirements in advance.

This saves time and money if, for example, incorrect instructions are given to an accountant and also ensures the assessor receives all required information to progress the claim.

Once the client has lodged their claim, their planner can ensure the process runs smoothly by acting as an intermediary between their client and the assessor to resolve any issues.

This ensures the best outcome for their client and is especially important if the client is not physically or emotionally capable of managing the process on their own.

Finally, a planner has a vested interest in any claim their client is currently or potentially making as it is likely to have an impact, to a greater or lesser extent, on their client’s existing financial plan.

Claims process checklist

• Have regular conversations with your client over the phone or on email – don’t just wait for the annual review. Checking in regularly and asking open-ended questions can unearth information the client may not even realise is relevant, like a change in job, a pay rise, or a recent injury or hospital stay. The latter may trigger a conversation about their potential eligibility to make an insurance claim, depending on what cover they have;
• Once you have identified a claim event, the more information you can glean from the client before they speak with the claims assessor, the better. Ensuring they have all documentation and data required will help them deliver what is needed to have their claim processed in a timely and efficient manner;
• Once your client has lodged a claim, track the claim to ensure it stays on course and any issues are resolved early. Some insurers allow planners to ‘opt in’ receive a copy of all correspondence between the insurer and their client. This is an easy way to ensure you stay on top of your client’s claim;
• If an issue does arise between the claimant and the insurer, act as the intermediary and liaise with both parties to resolve any problems and provide the insurer with the information they need;
• Once the claim has reached its finality, this is a good time to revisit your client’s financial plan. Whether the client receives income protection, which may be a reduced amount to their salary, or a lump sum, or nothing at all, they will need to work with you to adjust to any changed financial circumstances. This may include advice around what to do with a lump sum payment, how to finance medical bills or how to continue paying the mortgage on a reduced income; and
• Review the claim process with your client. Were they happy with the insurer? Were they happy with their insurance product? Did they think the process went smoothly?

Financial planners can play a valuable role in the insurance claim process.

While the client and the insurer have the most direct relationship, including the financial planner can ensure a smooth process – with all parties working together to deliver the best outcome for the client.

Assisting a client through the claim process is an extension of a planner’s advice and service. Planners have the experience and knowledge necessary to ‘demystify’ the process for their client.

Supporting a client through the claim process can be a critical part of a planner’s journey with that client, working towards their financial future, and addressing any bumps in the road along the way.

Simon Stanton is head of claims, wealth protection products at AMP.