The Importance of Knowing your Insurer will pay at Claim time

3 April 2015

Let’s face it, when looking at Insurance companies advertising and their promises when getting you to buy their product, they all appear to be pretty much the same. However, there are a number of differences when you get down to the nitty-gritty of policy wordings and it is important to know how this can affect any payments at claim time.

Sometimes it can be down to one company only covering certain types of conditions or paying out different amounts related to the severity of the condition under the policy. Many people feel aggrieved when they get to claim time and don’t receive the sum of funds they were expecting, but an explanation of the cover should be provided when the policy is issued with any misunderstandings cleared up then, rather than waiting until a time when there may already be additional stress due to the nature of the claim. 

Last week we attended two different Risk Insurer’s presentations, releasing new products and enhancements to their services as well as an update to some of the key points of their policies. It was made very clear by both these providers (And is also regularly re-iterated by the other companies that we are accredited with), that it is important when receiving any insurance advice that full clarity is provided when recommending insurance products, clearly outlining any limitations or risks as well as the obvious benefits of taking out personal risk cover, and I feel that part of this is knowing that the money is going to be available when you need it.

The first way to have confidence that the funds will be there when you need them from an insurance claim is by looking at the Insurance companies “financial strength rating”. Under the Insurance (Prudential Supervision) Act 2010, insurers need to show their financial strength from one of the main ratings houses (Standard & Poor’s or A.M.Best being the two main approved ratings agencies). These provide a rating based on financial stability and the company’s ability to meet its financial liabilities in the future. Most of the well-known insurance agencies in New Zealand sit with secure ratings, but some have a better financial situation than others. Under the terms of the same act, insurers also need to demonstrate adequate capital to keep meeting its on-going obligations. This is calculated every six months and determines that the company has a satisfactory “Solvency Margin” to cover the interests of those covered under the company’s policies. The experience of AMI, which required the assistance of a Government bail-out after the second Christchurch quake, highlighted the need for some surety around an insurance company’s ability to pay out its clients in the case of a major disaster.

There are many variables when it comes to choosing an insurance provider that is best going to suit your needs. For some people, price is the driving factor, whereas others may look for a provider who covers a certain type of procedure that others avoid. There may be additional benefits that come with the policy that may make them a more enticing option. For example, would you like to take out a policy with an insurer (Or even know who provides) covering financial and legal advice for those on claim? Another insurer provides access to a range of medical specialists from around the globe and what about the option of having the costs to return a body to NZ from overseas or from NZ back to the country of birth upon the death of the insured? Whatever you are looking for, access to a wide range of insurance providers is key to being able to make an informed decision. A local registered adviser will be able to give you choices from more than one insurer, but will help you to narrow the search so that you end up with a provider that will give you the right product at the right price for peace of mind for you and your family.

 

Published In Whakatane Beacon

This post was written by

John White - who has written 90 posts

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