Ombudsman Karen Stevens said a significant portion of complaints to the IFSO scheme involved the insured being turned down for not having proved a prima facie claim.
But many clients did not understand what that was - or why it should be up to them to prove a loss.
“Financial advisers have a really important role in educating their clients about the claim process and what clients must prove to get their claim paid,” she said.
“We hear from a lot of unhappy clients, who are surprised that it’s on them, not the insurer, to prove their loss and provide the evidence. It’s a good idea to set these expectations early, before clients need to make a claim.”
She said advisers could help by explaining the client's obligations to provide evidence for a claim.
In one case she dealt with recently, a man with income protection cover was injured when he fell running down steps.
In order to show a prima facie claim, the question was asked whether, solely due to injury or sickness, he was unable to perform his usual occupation for more than 10 hours a week or unable to perform one or more of the important income-producing duties of his usual occupation.
The case manager said there was no medical evidence of this and the insurer was right to turn him down on this basis.
In another case, a client was turned down because there was insufficient evidence to show he met the required policy definition when he was injured in a mountain bike accident.
The policy defined "major head trauma" as a trauma that caused at least 25 per cent impairment of whole person unction lasting more than three weeks. He was turned down because doctors believed he would improve.
“Financial advisers can really add real value for their clients,” Stevens said. “The best time to set expectations around insurance is before they need it. If you can help prepare your clients for the unexpected, they will be grateful to have insurance cover when the time comes.”
