Claims Management and Client Advocacy in Insurance – Part 3

International Standards and Other Jurisdictions

Beyond these specific countries, there are international benchmarks. The International Association of Insurance Supervisors (IAIS) issues Insurance Core Principles (ICPs). ICP 19 on Conduct of Business explicitly covers claims handling: it says supervisors should require insurers to treat customers fairly from before a contract is made through to the point where all obligations (claims) are satisfied. Guidance under ICP 19.10 (which deals with claims) echoes many of the things we’ve discussed:

• Insurers should have written claims handling procedures.
• Claimants should be informed about how to submit a claim, what information is needed, and typical timeframes.
• Claims should be handled promptly and fairly, and claimants kept informed of progress.
• If a claim is denied, the insurer should explain the reasons and how the claimant can dispute it.
• Conflicts of interest in claims (for instance, using an assessor who has an interest in minimizing payments) should be avoided or managed.
• Claim handlers should be competent for the lines of business they handle.
• If claims handling is outsourced (say to a third-party administrator), the insurer is still responsible for the outcome and must supervise that service to ensure standards are met.
• Intermediaries (like brokers or agents) involved in claims should also act fairly and in the customer’s interest.

These core principles influence many regulators. For example, the European Union’s Insurance Distribution Directive (IDD) requires that insurance distributors (agents, brokers) act honestly, fairly, and professionally in accordance with the best interests of their customers. This applies across selling and assisting with claims or complaints. It also mandated that insurers have effective complaint handling and that customers can seek out-of-court redress (ombudsman) in each member state.

Many countries have ombudsman schemes or consumer mediation for insurance similar to AFCA/FOS. Canada, for instance, has the General Insurance OmbudService and a separate one for life insurance (these are not legally binding like AFCA, but they resolve many disputes). Australia’s system is relatively robust with AFCA being binding.

When comparing globally, one sees a convergence towards:

• Emphasizing fair treatment and good faith.
• Strengthening the ability of customers to challenge insurer decisions without undue cost.
• Requiring clarity and transparency from insurers.
• Recognizing special situations (vulnerable consumers, disasters).
• Holding insurers accountable either through regulators, courts, or ombudsmen.

For advisers, regardless of region, the core takeaway is that regulations and industry norms generally support doing the right thing for the customer at claim time. A financial adviser acting as a client advocate is working very much in alignment with these global standards. Keeping abreast of regulatory changes is part of an adviser’s CPD obligation too – for example, knowing that in Australia claims handling is now under AFSL means an adviser can confidently say to an insurer, “As an AFSL holder, you are required to act fairly and efficiently in this claims process. I trust you will adhere to those obligations as we work together on this claim.”

Lastly, professional bodies often provide practice guidelines. In Australia, the Financial Planning Association (FPA) or Association of Financial Advisers (AFA) might have practice notes on helping clients with insurance claims as part of delivering ongoing service. These typically encourage thorough documentation, acting as the client’s advocate, and ensuring that the adviser’s remuneration structure does not impede them from advocating (e.g., being cautious of situations where a claim payout might claw back commissions – ethically, the adviser must still help the client even if it might result in a commission clawback on a life policy, for instance).

Having explored these regulatory and ethical contexts, we will now bring theory to life with a couple of case studies illustrating effective claims management and client advocacy in action. These examples will show how the principles discussed earlier translate into real outcomes, and what lessons can be drawn from them.

Case Study Examples

To demonstrate how claims management and client advocacy play out in real-world scenarios, let’s consider two examples. These case studies illustrate common situations advisers may encounter and highlight the strategies used to achieve positive outcomes for the client.

Case Study 1: Guiding a Family Through a Life Insurance Death Claim

Background: James and Laura are a married couple in their mid-40s with two children. They have a comprehensive financial plan in place, including life insurance on James (the primary earner) for $1 million. Their financial adviser, Priya, helped set up this policy five years ago and has been reviewing it with them annually. Tragically, James was killed in a car accident. Laura, in the midst of grieving and caring for her children, reached out to Priya for help with the life insurance claim.

Challenges: Laura was emotionally distraught and also worried about finances – mortgage, kids’ education, daily expenses – now that James was gone. She had never dealt with any major financial paperwork before, as James used to handle those matters with Priya. On top of that, because the death was accidental and sudden, a coroner was involved, meaning the final death certificate would take some time to be issued after an inquest. This could potentially delay the claim.

Adviser’s Actions:

• Immediate Support and Notification: Priya expressed condolences and assured Laura that she would take care of the claims process. With Laura’s permission, Priya notified the life insurer of James’s passing the day she found out. She filled out the initial claim notification form and indicated that the death was accidental and under coroner investigation.
• Documentation Management: The insurer required a certified death certificate and some identity documents, as well as a claim form and beneficiary’s statement from Laura. Knowing the death certificate might take weeks due to the accident investigation, Priya communicated with the insurer to explain the situation and ask if anything could be done in the interim. The insurer agreed that once they received an interim coroner’s report or police report confirming identity and cause of death, they could proceed, and the final certified certificate could follow.
• Priya obtained the police report from the accident (which clearly indicated James died at the scene in the crash) and forwarded that to the insurer, which helped satisfy the proof of death in the short term. She also helped Laura get multiple copies of the death certificate ordered (as she’d need them for various purposes).
• Managing Beneficiaries and Estate: The policy listed Laura as the sole beneficiary. Priya guided Laura to complete the beneficiary claim form, and since the policy was personally owned by James with a nominated beneficiary, it could be paid directly to Laura without going through the estate (avoiding probate delays). Priya double-checked with the insurer that the nomination was valid and on file – it was. This proactive beneficiary planning that Priya had helped set up years ago now paid off in efficiency.
• Communication and Empathy: Throughout, Priya maintained gentle communication. She offered to meet Laura at her home to help fill any forms, knowing it might be hard for Laura to come to the office so soon after the loss. During their meetings, Priya not only discussed the claim but also listened to Laura reminisce about James, providing a compassionate presence. This was not rushed; Priya allocated extra time for these discussions, recognizing their therapeutic value for Laura.
• Expediting Payout: Thanks to complete documentation and liaison, the insurer approved the claim within three weeks. They were awaiting the official death certificate to release funds (a formality they needed for audit). As soon as the certificate was issued, Priya got a certified copy to the insurer on the same day. She then tracked the payment: $1,000,000 was paid into Laura’s account the following week. Priya confirmed receipt and sat down with Laura to explain the amount and any interest that had been added (in this case a small interest for the few weeks processing).
• Post-Claim Financial Advice: Once the claim was paid, Priya’s role transitioned back into financial planning. Laura now had a large sum – which, while stemming from a heartbreaking event, was crucial to secure her and the children’s future. Priya helped Laura set up a high-yield savings account for short-term needs and began discussions about investing a portion of the funds to generate ongoing income (in line with the strategy they had originally planned if this scenario occurred). This step assured Laura that she could maintain her household and not rush back to work unless she wanted to.

Outcome: The life insurance claim was paid in full relatively quickly, without additional stress on the family. Laura commented that she didn’t know how she would have navigated the process without Priya. The funds allowed her to pay off the mortgage and set up an education fund for the kids, exactly what James and she intended the insurance to do. Importantly, Laura’s trust in Priya deepened; she retained Priya as her adviser for ongoing financial matters and referred two friends to her, saying “She was there for me on the worst day of my life and made sure we were okay financially.”

Lessons Learned: This case highlights the impact of empathetic and proactive claims management. Key takeaways:

• Advisers should ensure beneficiary nominations are up-to-date and valid; it can significantly speed up death claims.
• Early communication with insurers about special circumstances (like coroner involvement) can lead to flexibility (using interim proof).
• The adviser’s presence shielded the client from bureaucratic strain during mourning.
• Delivering the insurance promise in the moment of truth reinforces the value of financial planning. It also shows how combining technical know-how (documents, process) with human empathy defines best practice in client advocacy.

Case Study 2: Advocacy in a Disputed Disability Claim

Background: Maria is a 38-year-old marketing manager who took out an income protection policy and a Total & Permanent Disability (TPD) rider through her superannuation, based on advice from her financial planner, Josh. Two years after the policy commenced, Maria was diagnosed with a degenerative neurological condition. It severely limited her ability to work – she initially went on extended sick leave. Josh helped her initiate an income protection claim, which the insurer paid for 6 months. However, Maria’s condition worsened and her doctors indicated that it was unlikely she could return to work in any capacity she was trained for. This triggered a potential TPD claim (which typically requires that a person is unlikely to ever work again in their education, training, experience).

Challenges: When Maria’s TPD claim was submitted, the insurer was slow to respond. After many weeks, they requested extensive additional documentation – some of which had already been provided. Then, the claim was denied on grounds that surprised both Maria and Josh: the insurer said Maria had a pre-existing condition that she failed to disclose at application, and thus they were voiding (cancelling) her coverage from inception, as if it never existed. The alleged pre-existing condition was depression. Maria indeed had seen a psychologist briefly years before taking the policy, due to stress, but she genuinely didn’t consider that a “medical condition” to disclose, and the application form’s wording was a bit confusing. More importantly, that depression had absolutely no bearing on her neurological illness (which was something like multiple sclerosis).

This denial felt unjust – it wasn’t like she hid her neurological symptoms (those arose after she got the policy). The insurer was using an unrelated issue to refuse the claim entirely. If upheld, not only would they not pay TPD, but they could claw back the 6 months of income protection already paid, stating the policy was void. Maria was distraught; her condition was bad enough, and now the safety net she counted on was pulled away.

Adviser’s Actions:

• Policy and Law Review: Josh immediately reviewed Maria’s application file and the insurer’s denial letter. He noted that the insurer was rescinding the policy for non-disclosure of mental health treatment. However, under the Insurance Contracts Act, for life insurance (which includes TPD) taken out after 2021 changes, an insurer can only avoid the contract for non-disclosure if it can demonstrate it would not have issued the cover at all had it known the truth. Maria’s brief counseling likely would not have led to a decline – perhaps an exclusion or a premium loading at most. Furthermore, if an insurer would have still issued a policy (even with different terms), they aren’t allowed to void – the law would rather they adjust the claim or policy for what they would have done. So, Josh suspected the insurer’s blanket avoidance might not hold water legally.
• He also checked the timeframe: The policy was in place for two years. In many policies, after 3 years of being in force, an insurer can’t void for non-fraudulent non-disclosure (they can only adjust benefits). They were still within 3 years, but nonetheless the law’s duty of reasonable care applied since it was a post-2021 contract. Maria had answered a question about mental health to the best of her ability – arguably, she didn’t intentionally mislead.
• Gathering Evidence: To build a case, Josh helped Maria get a letter from her psychologist confirming the nature of sessions (stress management, not a chronic psychiatric illness) and a letter from her neurologist stating unequivocally that the neurological condition was unrelated and could not have been foreseen. He also quietly reached out to an underwriting friend (without revealing identities) to ask, “Would a brief history of mild depression normally disqualify someone from TPD cover?” The answer was no – usually it might be an exclusion for disability claims related to mental health but wouldn’t bar coverage entirely for physical illnesses.
• Internal Dispute Resolution Letter: Josh drafted a comprehensive letter to the insurer’s internal dispute resolution department. In it, he:
• Cited the duty of utmost good faith, arguing that the insurer’s avoidance of the policy, given the circumstances, was not in good faith.
• Referenced Section 29(3) of the Insurance Contracts Act (as recently amended) which limits an insurer’s right to avoid a life policy for innocent misrepresentation. He explained that the insurer needed to prove they would have declined Maria cover entirely to justify avoidance – which seemed implausible for a mild, resolved mental health issue.
• Pointed out that even if disclosure had been made, the claim in question was for a condition entirely unrelated to that non-disclosure, and historically courts and ombudsmen have frowned on insurers using unrelated nondisclosures to deny claims (this was a key message from the Royal Commission – one case highlighted was an insurer denying a heart attack claim because the person hadn’t disclosed a separate unrelated condition).
• Included the medical letters to show Maria’s honesty and that the non-disclosure was not wilful or relevant to the claim.
• In a polite but firm tone, requested the insurer reinstate the policy and honor the TPD claim, or else provide a detailed explanation of how their decision aligns with law and code obligations. Josh also mentioned that if not resolved, Maria would take the matter to AFCA.
• Advocacy and Escalation: The letter had effect. A week after receiving it, the insurer’s disputes team contacted Josh to discuss a possible settlement. They acknowledged there may be grounds to at least pay a portion of the claim. Josh held out for a full reinstatement and claim payment, emphasizing that Maria had been paying premiums in good faith and now was in a dire situation health-wise.
• The insurer, perhaps not wanting a precedent or an AFCA ruling against them, relented. They agreed to reinstate the policy (no avoidance) and assess the TPD claim purely on its merits. A month later, they admitted the TPD claim and paid out the full benefit (let’s say $500,000) to Maria’s super fund (from which it was then released to her under disability grounds).
• Additionally, because of the delays, the insurer paid interest on the late payment. They did not, however, admit any wrongdoing formally – but the outcome was what Maria needed.
• Throughout Communication: During this process, Maria was very anxious. Her health was deteriorating and she had stopped working, so she really needed that payout for future care and income. Josh kept reassuring her that “We have a strong case” and updated her on each step. He also prepared her mentally that if the insurer didn’t budge, AFCA could take several more months – but that he was ready to go the distance. This helped Maria feel she wasn’t alone and that someone was fighting in her corner.
• After the win, Josh advised Maria on managing the lump sum (setting aside funds for ongoing medical treatment, and using part of it to generate an income stream for her living expenses).

Outcome: Through tenacious advocacy, the adviser turned a seemingly hopeless denial into a successful claim. Maria received the financial support she was entitled to, allowing her to focus on her health without the added stress of financial ruin. She was incredibly grateful and posted a glowing review of Josh’s services online, specifically mentioning how he “stood up to the insurance company and knew more about my rights than I ever could have on my own.”

Lessons Learned: This case underscores the importance of technical knowledge and assertive advocacy:

• Advisers should familiarize themselves with current laws regarding claims and non-disclosure. Changes in 2021 to Australian law in this area were pivotal to this case; knowing them gave Josh the arguments needed.
• Don’t accept an initial denial if something seems unfair. Investigate and challenge – insurers can and do change decisions upon challenge, especially if the challenge is well-founded.
• Use all available channels: internal dispute resolution should be attempted (often quicker and less formal than external), but be ready to escalate to AFCA. In fact, having AFCA as a looming option strengthens the client’s hand in internal talks.
• Maintain professionalism in communications. The success was due in part to a clear, legally-backed argument rather than just emotional pleas.
• The adviser’s role as a stress buffer is vital. Maria, on her own, might have given up or not known where to start. Advisor involvement can drastically change outcomes in disputed claims.
• Lastly, this highlights why ongoing service from advisers is worth it – claims issues can arise years after a policy is put in place, and having an adviser who remains engaged can mean the difference between success and failure in a claim.

These case studies show that while each claim story is different, the core practices of being proactive, knowledgeable, communicative, and truly client-centric are universally effective. Now, drawing from all the discussions and examples, we will outline a set of best practices and strategies advisers should follow for exemplary claims management and advocacy.

Best Practices for Effective Claims Management and Advocacy

Bringing together everything covered, this section lists key best practices that financial advisers (particularly in Australia, but applicable broadly) should follow to excel in claims management and client advocacy. These practices ensure that advisers provide not only technical assistance but also uphold the highest standards of ethics and client care.

Before a Claim: Preparation and Prevention

• Thorough Policy Documentation: Keep copies of all policy documents, applications, and insurer communications on file. This helps if a claim arises years later – you can quickly reference terms, medical disclosures, etc. It also aids in any dispute, as having the original application can counter unfounded non-disclosure claims.
• Educate the Client: As discussed, ensure the client understands what they’ve bought – coverage scope, exclusions, waiting periods, sum insured, and claims process basics. An informed client is less likely to run into avoidable problems (like failing to notify a claim or misunderstanding coverage).
• Encourage Disclosure: Advise clients to err on the side of over-disclosure when applying. A moment of discomfort disclosing a medical or lifestyle detail is far better than a denied claim later. If a client is unsure whether something is relevant, encourage them to disclose it anyway or allow you to check with the underwriter anonymously.
• Set Service Expectations: Let clients know as part of your service that you will support them through claims. Provide them with a simple one-pager on “What to do if you need to claim” with your contact info and basic steps. This prepares them to call you first in the event of a claim, allowing you to guide from the start.

During a Claim: Process Management and Communication

• Act Swiftly: Time is often of the essence in claims. Contact the insurer and client promptly after being notified of a claim event. Submit notifications and forms as soon as possible. Prompt action can speed up the benefit payment and also prevents insurers from later arguing about delayed notice.
• Organize and Prioritize Documentation: Use a checklist for each claim of documents required. Tick them off as obtained. Provide a cover letter indexing everything when sending to the insurer – this makes the claims assessor’s job easier and shows you’re on top of the case.
• Maintain Detailed Records: Log every phone call (date, person, summary of conversation). Save all emails and letters. This not only helps you track progress but serves as evidence if there’s a disagreement. For example, if an insurer claims “we never received that document,” you can pinpoint when and to whom it was sent.
• Keep the Client Updated: Even if there’s no news, update the client at least once a week or at notable milestones (“We’ve submitted all documents, now we’re waiting on the insurer’s response – I expect we’ll hear back within two weeks as per their usual timeline.”). This prevents the client from feeling forgotten or growing anxious due to silence.
• Two-Way Communication: Encourage clients to voice any concerns or new information. Sometimes clients won’t volunteer info unless asked. Check in: “Has your doctor said anything else about your condition that we should tell the insurer?” This can be important if, say, a prognosis changes (could speed up a decision if the condition worsened).
• Manage Expectations Realistically: If you know typical timeframes (e.g., trauma claims often take 2-4 weeks once all info is in, or TPD claims could take several months if medical stability is needed), communicate that up front. If the process is likely to be lengthy, consider breaking it into stages for the client: “First, let’s get all paperwork in over the next two weeks. Then the insurer usually takes a month to review. If it goes beyond that, we’ll follow up.” This way, clients have a mental timeline and won’t panic prematurely.

Client Advocacy and Ethical Practice

• Put the Client’s Interest First: This seems obvious, but in practice it means: be willing to invest the time and effort needed to achieve a fair outcome, even if it’s onerous. For instance, writing a 10-page dispute letter or spending hours on hold with hospital records departments – these tasks are part of championing your client’s cause.
• Honesty and Integrity: Never embellish or encourage a client to exaggerate a claim. Advisers must maintain ethical integrity – advocacy is about presenting the truth in the best light, not bending the truth. Misrepresenting information can not only void a claim but also tarnish your professional reputation and potentially breach the law.
• Know Your Limits: While advisers should be knowledgeable, know when to consult an expert. If a claims situation delves into complex legal territory, it may be wise to involve or get advice from an insurance lawyer. Similarly, if medical complexities arise, perhaps suggest the client get an independent medical exam or specialist’s report to support their case. Build a network of professionals (lawyers, forensic accountants, medical consultants) you can call upon if needed.
• Stay Informed (CPD): Regulations and industry practices evolve. Use some of your Continuing Professional Development hours to attend seminars or read updates on insurance law, AFCA determinations, and code updates. For example, as we saw, new codes or legal changes can significantly impact claims (like the duty to take reasonable care replacing duty of disclosure, or code provisions on timeframes). Being up-to-date ensures your advocacy leverages the latest rules.
• Confidentiality and Sensitivity: Claims often involve personal, sensitive information (medical records, financial info). Handle all client data with strict confidentiality. Also, within a family, be cautious – if your client is the insured but someone else (like a spouse or parent) is inquiring, ensure you have proper authority before sharing details. This is both a privacy law issue and a trust issue.
• No Conflict of Interest: Be mindful of any potential conflicts. For instance, if you’re also the broker of a general insurance policy, your duty is to the client, not the insurer, when assisting with a claim – despite any relationships. Also, if your remuneration could be affected (like clawback of life insurance commission upon a death claim within a certain period), never let that dissuade you from helping the client claim. The client’s interest in getting their payout far outweighs any loss of commission. Ethically, you must act for the client’s benefit regardless of your own.
• Documentation and Disclosure of Advice: If you give advice related to the claim (e.g., recommending to accept a settlement, or advice on a policy conversion instead of claim), document it and ensure it’s within your scope. Typically, claims support might not be “financial product advice” per se, but any guidance that could affect the client’s financial decision around a claim should be clear and, if significant, confirmed in writing.

Interaction with Insurers

• Professional Relationships: It helps to cultivate good working relationships with insurance company reps – BDMs (business development managers), claims managers, underwriters. While you will fiercely advocate for your client, maintaining respect and professionalism with insurer staff can encourage cooperation. Sometimes a friendly call to a BDM to say “Hey, my client’s claim is stuck, can you help escalate it internally?” can work wonders, as they have an interest in keeping advisers (and therefore clients) happy.
• Escalate when Necessary: Don’t hesitate to ask for a supervisor or a specialist if the front-line claims handler isn’t resolving issues. Use the formal complaint channels early if you sense stonewalling or error. It’s often better to engage the internal dispute team (who have more authority) sooner rather than later if things are going poorly.
• Leverage Codes and Regulations in Discussions: As illustrated before, referencing obligations like “according to the Life Insurance Code, you are supposed to provide updates every 20 business days – it’s now been 30 days since we heard anything” signals to the insurer that you know the rules. It puts gentle pressure on them to not drop the ball.
• Mediation and Alternative Solutions: If a claim situation is contentious, sometimes suggesting a round-table meeting or mediation can help. For example, bringing the client, adviser, and insurer’s claims manager (and perhaps an independent facilitator) to discuss can clear up misunderstandings that lengthy correspondence might not. Some insurers will agree to such meetings for complex cases – it’s an option to consider before legal routes.

After the Claim: Follow-Through

• Ensure Payment Accuracy: When a claim is paid, double-check the amount. Is it exactly what was expected? Were any fees deducted that shouldn’t have been? For income protection, was the waiting period applied correctly and offsets (like other income) calculated right? If anything is off, raise it immediately with the insurer.
• Client Debrief: Meet with the client after claim settlement to wrap up the experience. Discuss any learnings (for instance, “During this claim we discovered you might need more coverage” or “We saw how not having trauma insurance meant you had to dip into savings; maybe consider that cover moving forward”). However, be sensitive – right after a claim (especially health-related), the client might not be ready to talk new insurance; but it’s worth noting for a later review.
• Policy Updates or Cancellation: A claim might affect remaining coverage. For example, if a TPD claim is paid on a life policy, often the life cover is reduced or ceases. Make sure the client knows what insurance coverage they still have (if any) and update your records. Similarly, if an income protection claim is ongoing, diarize to check in periodically on its status.
• Celebrate or Commemorate: If appropriate, acknowledge the end of a difficult journey. In a death claim, it might be offering a sincere note of condolence and a small gesture like sending a thoughtful card or memory gift. In a living claim, congratulating the client for getting through a tough time and expressing goodwill for their recovery shows you genuinely care beyond the transaction.
• Reflect and Improve: Each claim is an experience to learn from. Conduct a quick internal review: What went well? What was challenging? Could anything have been done differently to improve the process? Use those insights to refine your claims handling protocols for future clients. Perhaps you realize you should insist on getting all medical history up front to avoid surprises, or maybe you find a better way to track communication. Continuous improvement is part of professional development.

By adhering to these best practices, advisers can provide a level of service that not only meets regulatory and professional standards but often exceeds client expectations. Mastery of claims management and advocacy truly sets apart a comprehensive financial adviser from one who merely sells products. It transforms the adviser into a trusted partner in the client’s most challenging moments.

Conclusion

Claims management and client advocacy in insurance are where the promise of insurance and the value of financial advice are ultimately realized. For Australian financial planners, developing expertise in this area is not just a nice-to-have skill – it’s a fundamental component of delivering on the fiduciary duty and ethical commitment to serve clients’ best interests.

When advisers guide clients through the life cycle of a claim, they are effectively delivering the product’s value. From the moment of claim notification through assessment, negotiation, and settlement (or dispute resolution if needed), the adviser’s involvement can dramatically improve the experience and outcome for the client. Clients get the benefit of the adviser’s knowledge of insurer obligations and processes, help in navigating paperwork, and a strong advocate who will stand up for their rights. This support is especially critical during what is often a stressful and vulnerable time in the client’s life.

By highlighting insurer responsibilities and policyholder rights, this report has shown that there is a robust framework in place to ensure fairness – from Australian regulations and codes to global standards. A savvy adviser leverages these safeguards to hold insurers accountable, all while maintaining professional relationships that facilitate smooth resolutions. The comparisons with the UK, US, and international principles illustrate that fairness, timeliness, transparency, and good faith are universal tenets of claims handling. Australian advisers operating within ASIC’s regime and codes are well-equipped (and obligated) to insist on those standards for their clients. Moreover, as the case studies demonstrated, advisers who combine technical know-how with empathetic client care can turn even challenging claims into success stories.

In terms of professional development (CPD), advisers should view ongoing learning about claims and advocacy as essential. The financial planning profession in Australia, under the standards set by the Financial Adviser Standards and Ethics Authority (FASEA) and now the single disciplinary body, expects practitioners to maintain and improve their knowledge and skills. Claims management intersects with areas like legal knowledge, communication, ethics, and client care – all of which are relevant to the CPD areas outlined for advisers (such as client care and practice, regulatory compliance, and technical competence). Ensuring that content like this module is read and internalized contributes to meeting those CPD goals and ultimately leads to better client outcomes.

For clients, an adviser who is proficient in claims advocacy greatly enhances trust and loyalty. Clients are more likely to stay with an adviser long-term and refer others when they see that the adviser will truly go into bat for them, not just at the point of sale but at the moment of truth when the insurance is needed. This boosts the adviser’s reputation and business sustainability.

From a compliance perspective, helping clients get fair claims outcomes is also part of managing advice risk. If clients feel abandoned during a claim or suffer a poor outcome that could have been avoided, they may complain or even take action against the adviser. On the flip side, if an adviser does everything reasonable to assist and documents it, even if a claim doesn’t go the client’s way, the client will recognize the effort and is less likely to blame the adviser.

In conclusion, mastering claims management and client advocacy is a win-win. It fulfills the raison d’être of insurance – to provide financial relief in times of loss – and cements the adviser’s role as the client’s advocate and trusted ally. It aligns with global best practices and regulatory expectations, ensuring advisers are on the right side of both ethics and law. Most importantly, it transforms potentially difficult moments into opportunities to deliver profound value and compassion, reflecting the very best of what the financial planning profession stands for.

The insurance policy might be the product purchased, but it is the adviser’s guidance and advocacy that often deliver the real peace of mind. By adhering to the principles and strategies outlined in this module, financial advisers in Australia (and elsewhere) can confidently guide their clients through the storm of insurance claims to the safe harbor of fair and timely settlements – thereby protecting not just their clients’ wealth, but their well-being and trust in the financial system.

References

1. ASIC Information Sheet 253 (2021). Claims handling and settling: How to comply with your AFS licence obligations. (Outlines new licensing requirements and obligations for insurance claims handling in Australia.)
2. Norton Rose Fulbright (2021). A guide to 2021 insurance regulatory reforms. (Summary of Hayne Royal Commission reforms including regulation of claims handling and definition of ‘claimant intermediaries’.)
3. Life Insurance Code of Practice 2.0 (2022), Financial Services Council / Council of Australian Life Insurers. (Industry code setting standards for life insurers in claims handling, timeframes, communications, support for vulnerable customers.)
4. General Insurance Code of Practice (2020), Insurance Council of Australia. (Industry code for general insurers with commitments on claims timeframes, complaints handling, and catastrophe responses.)
5. Herbert Smith Freehills (Jan 2024). Back to Basics: Insurance claims handling and the key conduct obligations. (Article discussing ASIC’s focus on claims handling, duty of utmost good faith, and efficient, honest, fair conduct obligations in context of claims.)
6. International Association of Insurance Supervisors – Insurance Core Principle 19: Conduct of Business (2019). (Global standard emphasizing fair treatment of customers through to claim resolution, including guidance on claims handling best practices.)
7. Financial Conduct Authority Handbook, ICOBS section 8 (UK). (FCA rules requiring insurers to handle claims promptly and fairly, not unreasonably reject claims, and settle promptly once agreed.)
8. NAIC Unfair Claims Settlement Practices Act (USA, Model Law). (Defines unfair claim practices such as delaying investigations, failing to affirm coverage, lowball offers, and outlines standards enforced by state insurance regulators.)
9. AFCA Annual Review 2023-24 – Insurance Complaints Statistics, Australian Financial Complaints Authority. (Provides data on volume and nature of insurance complaints, noting common issues like claim delays and denials, and importance of communication and record-keeping.)
10. 1Life (Oct 2022). Managing expectations is key to happier clients. (Article for advisers on importance of educating clients and managing service expectations, including during insurance claims.)
11. Aon (2023). What is Claims Advocacy? Aon Claims Management Brochure. (Defines claims advocacy and outlines steps like assessing loss, reviewing coverage, developing strategy, and escalation to ensure fair claim outcomes.)
12. SCM Financial Group (2023). How Adviser Assistance can support your Life Insurance claims. (Blog citing ASIC/APRA data that over 90% of life claims are paid and showing higher claim acceptance rates for advised policies vs direct, underscoring the value of adviser involvement.)