A recent poll done by RiskInfoNZ asked advisers to consider outsourcing clients' claims to an advocacy service in order to devote more time to building their business.
- 74 percent answered 'No',
- 14 percent answered 'Yes'
- 12 percent answered 'Not Sure'.
This is quite a sensitive subject, with strong feelings on different sides of the debate. For example, at the recent Financial Advice New Zealand conference Jane Eschenbach made it clear that she feels advisers should handle their own claims.The benefits, in a small advice business, of handling your own claims are significant.
- Closing the circle from recommendation to claim, creates a positive feedback loop: you get to see exactly how well the product and company perform when it really counts.
- The benefits of engaging with the customer again, delivering on the promise of the product, are powerful.
- Providing process help - navigating the tasks required to make a claim, for example - is highly valued by the client at a time when their personal resources are probably at a low point.
- Obtaining referrals from the resolution of the claim.
On the other hand, specialisation has always been a factor in increasing efficiency of businesses. Larger advice businesses routinely have specialist claims teams. You might say that scale and specialisation tend to go hand in hand. What are the benefits?
- Specialisation allows deeper learning - some one who deals with claims all day, gets better at them
- Specialists have more familiarity with rarer claims types and events
- Where a generalist may need to seek legal advice, a specialist may have already received an opinion on this type of situation
- Avoiding handling claims allows for more specialisation in advice-giving
There are some reputational risks to consider - in the UK some claims management businesses have become associated with poor practice. They have chased business from policy-holders that may be eligible to receive compensation for policies that were sold badly by banks. While some would argue that this is a valuable service allowing consumers that may otherwise be unaware of the compensation available, there have been some systematically poor practices associated with them.
The field in New Zealand, however, is wide open. Advisers that do not have to opt for an all or nothing approach. You might handle most claims yourself, but call in support for review and backup on more demanding cases - or if you just need the help due to workload issues.
You can Click here to read more on the Risk Info article.