Behavioural economics' challenge: would policymakers do any better?
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UK: Income Protection Immediate Support Payments

In the UK an income protection insurer (British Friendly) is now offering to make 'immediate' support payments, albeit at the end of the waiting period, even if there is incomplete medical information. The new found flexibility looks a lot like formalising some sensible discretion on the part of claims managers. In truth, claims managers may be subjects to conflicts between a requirement to be thorough, and a requirement to meet the needs of a client that is in trouble - already disabled, and probably in need of funds.

You can imagine the situation: say, there's a diagnosis, that kind of diagnosis is rarely wrong, but there is a standard test / procedure to check, and for whatever reason, that is taking time. Discretion to pay may be exercised already, but creating a process makes the rules fair for all. So the company makes the payment, subject to a maximum, and with the requirement that should it turn out the claim isn't valid, then the money advanced can be recovered from a future claim (it is not immediately repayable, remember, this person is off work). Anyone who would like to let me know if they have had cases where such discretion has been exercised, please drop me a line.

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