My Journey to and from the Earthquake Claims Business
In September 2017 I decided to “wind down” my involvement in auditing and negotiating earthquake claims. If I am honest with myself, I just got sick and tired of what I regard as the unethical behavour of the insurance companies in managing earthquake claims.
In 2011 when I initially set up the claims audit business it was to help my own KSL clients. I expected that we would be all “done and dusted” within 12 to 18 months. The reality was, it ended up consuming me! The business diversified into a specialist claims audit business which I operated for almost six years.
With the successful integration of the new shareholders from the Maurice Trapp Group into KSL Insurance I am delighted to now be embarking on the continuation of my first love – Life Insurance Auditing. Helping clients (before they have their claims) through my Pre-Claims Audit.
What the earthquake sequence has taught me as an insurance veteran of 48 years, is that the principles of good faith and Insurance integrity vanish when a disaster strikes at the heart of the profitability of an insurance company.
It has also taught me that most clients are unaware of the idiosyncrasies, fine print and interpretations of the language (“weasel” clauses) used within insurance products. They trust and rely on their adviser, bank officer, or online salesperson and assume they are receiving the correct advice and product for their particular situation.
The reality has been that many of the clients I have settled claims for, did not have the correct policy and/or did not receive the correct advice from their loss adjuster/claims manager/broker and would have been significantly disadvantaged if they had not contracted me to audit and negotiate their claim.
I have successfully settled over 300 claims. From 2014 the business kept extensive statistics on the last 186 claims which we recently reported to MBIE.
|186 Claims||Total||Ave. per house|
|Offers received when KSL were initially appointed||$53,781,946||$289,150|
|Settlement offers negotiated by KSL Audit||$134,875,218||$725,135|
|Increase over initial offer||$80,754,271||$434,162|
|Average increase as a percentage per claim||251%|
What I Expect from Insurance Companies on Behalf of Clients
In my renewed life insurance audit role I have developed a very disciplined approach to the selection process for partnering with Insurers whom I am prepared to recommend and place my clients’ financial future certainty with.
- I need to be satisfied that they are committed to the New Zealand Insurance market.
- They need to demonstrate with 10 years experience that they not only have the claims paying capacity to meet their claims, but the desirability to pay their claims.
- They must have an “A” or better credit rating. They must have a significant balance sheet, preferably with an overseas listed parent as the policy may be required for 30 or 40 years.
Clients must also remember that the current or next purchased contract may be their last opportunity to protect themselves. If your health, occupation, sporting or lifestyle habits change then the level of cover and future rates will be based on these then declared conditions.
Top Quartile Products
The insurer’s selected must offer products that are “top quartile” by the research house comparators with “best practice” definitions. For example heart attack definition mirroring the medical definition, any early stage cancer rather than limited to nominated cancer areas, e.g. prostate, breast, etc.
Clients need to understand or at least be aware of what the differences are in some of the terms expressed by insurance companies. E.g. passback upgrade benefits, cost ratchets in yearly renewable contracts. Differences between convertibility, premium freezing, level premium options and yearly stepped options. The financial difference between accelerated and stand-alone benefits. Terminal illness, loss of earnings vs agreed value vs indemnity, own occupation vs any occupation, automatic reinstatement. Any cancer vs specified cancers, heart attack definition aligning with medical definition.
Through the work that we have completed in the earthquake claims area and the observance of the public’s lack of understanding of good faith contracts, it has amplified the need for all New Zealanders to urgently undertake a life insurance audit to establish the appropriateness or otherwise of their insurance policies.
Most risk conscious people own some level of life, trauma, disablement, loss of income and/or medical insurance, but very few are aware of the “fine print” associated with these policies and the outcome of this ownership at claim time. That is why you need to have a talk with me.
Our Pre-Claims Audit System
- You provide me with an overview of your family circumstances and insurance arrangements. For this purpose, you can download our “Fact Find” document at the foot of this email.
- Based on the information you provide in the Fact Find, I begin the process of assessing the appropriateness of your risk management strategies using insurance to protect your family’s position.
- This includes an assessment by me of the appropriateness or otherwise of the level of insurance and the products you currently have.
- I will meet with you and present you with a “prudent person assessment” of the products and levels of cover that you should have based on this standard.
- In forming this opinion, I am having regard to my knowledge of the industry and the information you have provided me, particularly in relation to your perceived needs of protection for you and your family.
- I will identify products that meet our threshold of an insurer’s claims paying ability, their historic representations of their desirability to pay claims, the terms and conditions of the policy, the sums insured and the appropriateness to your current risk situation.
- Comparing and contrasting what you currently have with what I recommend.
- Making a decision if a revision of your insurance portfolio is required, having regard to your budget and your tolerance of risk.
Through my experience and audit expertise, I have developed a Pre-Claims Audit that can determine very quickly the appropriateness or otherwise of the products you own.
I am offering this service on a no fee basis.
If I identify deficiencies or inappropriate products (which occurs in the majority of cases), then based on my recommended product selection you will allow me to place the upgrade insurance product recommendations. I will receive a commission from the insurance company recommended.
The audit will involve you completing the Fact Find (that will need to be completed prior to our meeting) When we meet, I can immediately talk to your situation specifically (approximate / guesstimates are fine for assets and debt). Please have the details of your existing insurances if possible.
This data will allow me to provide you, at the meeting, with a Pre-Claims Audit of your current policy terms and conditions and the appropriateness or otherwise of the levels of cover and products based upon your financial information disclosed.
The report and insurance recommendations that I will present to you after the meeting will be written under the “prudent person” standard. The levels of cover and product will be what a prudent person with my knowledge of the industry and my knowledge of your disclosed affairs would purchase to adequately financially protect themselves and their loved ones.
The recommended products will be based on the insurers’ claims paying ability, their desirability to pay claims based on their historic reputations, the terms and conditions of the policy, the sums insured and their appropriateness to your current risk situation.
After considering all of these factors we then consider the premium cost and payment structure.
The Government concerns expressed in the recent Press article of the life Insurance industry’s standard of advice, would suggest that you owe it to yourself and your family to take advantage of this very valuable Pre-Claims Audit Assessment offer.
Insurance / n. certainty
I know the challenges that come with living a busy life whilst still being able to enjoy and protect the people and things you love the most.
Why, because I am just like you. AND… I have suffered a heart attack and three months later, totally unrelated, diagnosed with bladder cancer.
So if anything I have covered here does not make sense or feels a tad overwhelming, call me…that’s what I am here for.
I see my future role as making sure that:
- You are confident that you and your family are protected, no matter what.
- If something goes pear-shaped, I’ll be in your corner fighting tooth and nail to get your claim paid.
- You don’t need to worry, I am on your team so that you can get on and enjoy your life!
I will be contacting you over the next few weeks to offer you a no-cost discussion. If you know that you need a Pre-Claims Audit and would like to speak to me earlier then please feel free to contact me to arrange an initial meeting.