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Getting disclosure right: How to avoid client misrepresentation

Published 18/05/2022

To reduce the chances of your client experiencing a declined claim due to non-disclosure or misrepresentation, advisers play a pivotal role. Here are six things you can do to help ensure clients answer underwriting questions honestly and accurately.

As an insurer, our aim is always to pay all valid claims as quickly as possible, with minimum fuss. For the most part, this is made possible. In 2020, we paid 99.6% of Life Cover claims, 91.3% of Serious Illness Cover claims and 96.8% of Income Protection Cover claims1.

Unfortunately, claims do occasionally need to be declined due to client misrepresentation in line with the Association of British Insurer’s (ABI) Code of Practice2. To help ensure clients get the best possible outcome, it is crucial that questions are answered honestly and accurately at application stage – this will ensure that fair underwriting terms are offered and help prevent a claim from being declined later down the line.

It’s not just clients that are negatively impacted by this. Advisers can face client complaints, impaired relations with the insurer and potentially a hike in Professional Indemnity (PI) insurance costs. And let’s not forget the reputational damage it can do.

To help avoid client misrepresentation, here are six things that advisers can do.


1.

Make clients aware of the importance of answering questions honestly and accurately
And the potential impact that non-disclosure would have on a claim outcome. Clients themselves must always provide responses to their own questions, even for joint applications. This is especially important given that question sets are different for male and female applicants, with gender specific conditions listed.

2.

Highlight the areas where misrepresentation is most common
Such as smoking, weight and alcohol intake – and help clients gather accurate information where needed. For example, if a client is unsure of their weight, suggest they weigh themselves. If needed, Vitality nurses are on hand to help clients.

3.

Encourage clients to think carefully about their health
It’s important not to rush the application stage, while alerting clients to consider their medical history in advance can also help the process. Timeframes involved - such as five years for high blood pressure and 12 months for smoking – are also worth flagging. It is important for advisers to utilise our pre-sale underwriting support, rather than try to act as an underwriter themselves, even with the best intentions. This can add risk and increase the chances of client misrepresentation. 

4.

Get communication right
Aim for clarity around potentially complex or sensitive medical conditions, such as mental illness, while ensuring questions are delivered at a careful and considerate pace (without grouping conditions). This is crucial in gathering accurate information and making potentially vulnerable customers feel comfortable. Extra assistance such as translation and interpretation services should also be considered for clients who do not speak English as their first language or where communication is a barrier.

5.

Utilise eAMRAs and explain GP consent
Electronic GP reports (eAMRAs) allow customers to provide medical information to insurers digitally and provide their consent during the application process. They can speed up the process and allows advisers to log an accurate electronic record of it online. It is therefore important to clearly explain this process and its significance to clients during the underwriting process.

6.

Thoroughly review customer details
Checking and confirming the personal information provided decreases the risk of misrepresentation and prevents intermediaries from being held responsible for a claim not being paid later down the line. This can be done by asking clients to review the record of their details and to make amendments where needed.

Common areas for misrepresentation


• Smoking
• Weight
• Alcohol
• Pre-existing medical conditions
• Mental health

Working towards better client outcomes is good for everybody – and this includes you and your business. Visit our Supporting business quality page to find out more.

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Sources:

1 Vitality Claims and Benefits Report 2021
2 ABI Code of Practice, June 2020