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8 reasons why an insurance advocate is the best option

(5 April 2022 - by Bryan Tucker)

So, the insurer has declined your insurance claim!

• Maybe you didn't disclose all the information you should have?
• Maybe you made a mistake when the claim occurred?
• Maybe the policy doesn't entirely cover the circumstances of your situation?

Whatever the reason, you and your family are now in deep because you haven't got the money you need after the stress of your loss.

You may have tried some of the following with little to no success:

Written a strongly worded letter to the insurer

Insurers usually don't decline claims without a very in-depth assessment process. You or your adviser won't change that decision without some new and very relevant information being brought to the discussion table.

Complained to your adviser to see if s/he can help

Sometimes the insurance adviser is partially at fault so their commitment to resolving things may not be 100%.

Written to the Insurance Ombudsman

The Insurance Ombudsman is an excellent free service, but the majority of its decisions go in favour of the insurance company based solely on the wording of the policy document.


So this leaves you with your lawyer or an advocate. 

THE LAWYER OPTION

I may be biased, but I believe taking on your fight with a lawyer is a terrible decision. And here's why:

Not Experts: Your lawyer may know the law but won't necessarily be an expert in the insurance industry. They can only look at your claim from a strictly legal perspective. If the insurer has followed the letter of the law in interpreting its policy wordings, there isn't much scope for your lawyer to manoeuvre.

Crazy expensive: Often life insurance and disability claims are for substantial sums of money. If the dispute is over $350,000, the case is heard in the High Court. Here's a legal firms estimate of what a civil dispute could cost in either the District or High Court. Of course, confidence may be expressed by your lawyer at the outset – as they agree to represent you at $450+GST per hour.

Big fry - small fry: The other problem you have with fighting like this is that insurers have deep pockets. They understand that most policyholders don't have endless money supplies, so they will fight until you run out of money. They don't want to create a legal precedent that could cost them with other claims, so they will fight even if the cost to them is more than your claim.

And, of course, you pay your lawyer whether you win or lose. Nothing could be worse than losing a fortune when a claim is declined only to lose more money paying lawyers' bills.

THE ADVOCATE OPTION

Some Advocacy organisations will consider your claim and sometimes agree to fight the battle on a no-win-no-fee basis. The fee is often a proportion of the claim payment they negotiate on your behalf. Alternatively, if you feel the case is likely to be straightforward, you can choose to pay them an hourly rate to pull all the right strings. The two major players are:

-  CLAIM ASSIST – For car, house, contents and some life insurance claims
  (https://www.claimassist.nz)
-  DECLINE – For life, trauma and disability claims
  (https://www.decline.co.nz)

Here are eight reasons why an advocate is the best choice. 

1. IT'S ALL THEY DO
Unlike your lawyer, who may have been fighting an insider trading case or doing conveyancing on a house sale yesterday, the insurance advocate only fights insurance claims. They eat and sleep declined insurance claims, so they have particular expertise. Their reputation will precede them if they're good at what they do. The insurer may speed up the decision-making process if they know they're dealing with an expert. The advocate is so confident of your position that s/he is prepared to work for free until the claim is resolved.

2. THEY KNOW THE INDUSTRY INSIDE AND OUT
Knowing the law related to insurance policies is an essential component but may not get your claim over the line. Understanding the sensitivities of insurers, regulators, legislators and insurance advisers is also helpful. We once had a claim accepted partly because we listed all the insurer's shortcomings identified in a Reserve Bank review of their business. We then demonstrated where the treatment of our client mirrored those shortcomings. In another case, an insurer agreed to allow significant changes to a comprehensive company policy because we knew their adviser had breached a few unrelated compliance issues. We knew the adviser had a close personal relationship with the CEO of the insurance company. If we asked the adviser in the right way, she could get ANYTHING done by the insurer.

3. THEY KNOW MANY OF THE DECISION-MAKERS
If your advocate has grown up in the insurance industry, it's very likely they have worked with many decision makers through the years. Your lawyer probably hasn't spent a week every year socialising at international conferences with the CEO and Chief Claims Officer of some of the largest insurance companies. For Decline's advocate, Bryan Tucker, this is his reality. The Principal Underwriter at one large insurer used to be his personal assistant. Having a personal relationship goes a long way to getting the right decision. 

4. ADVOCATES DON'T HAVE A CONFLICT OF INTEREST IN THE BACKGROUND
Your adviser has an ongoing contractual relationship with the insurance company. They are paid thousands of dollars each month for the servicing work they do for the company's policyholders. This relationship can create a situation where the adviser doesn't want to upset the insurer by pushing too hard with your case.

Lawyers don't have the same financial imperative but operate within a collegial atmosphere with lawyers on the opposing side. Often there are offline discussions between them about what it might take to get you to settle and go away. This may not be in your best interests. Lawyers are also bound by the rules of the bar that dictate what they can and can't do. Advocates don't have the same restriction but obviously must work within the bounds of the law.

5. THEY HAVE OTHER PRECEDENT CASES THEY CAN USE AS AMMUNITION
Knowing how an insurer has dealt with other claims that mirror yours can often be the difference between winning and losing. Showing examples of other clients offered cover when presenting with the same health issue leave insurers in a difficult position.
Sometimes they will look at your claim in isolation, and the sizeable pending claim will cloud their decision making. The advocate's job is to bring them back to the centre by encouraging a more consistent assessment process. We're able to do this with the raft of examples we've built up through the years. 

6. ADVOCATES ARE SOMETIMES OPERATING AS ADVISERS AS WELL
If your advocate also operates as an adviser, s/he will have an excellent idea about where to look for flaws in the sales, underwriting and claim process. One or two significant errors on the part of the adviser or insurer will make up for a multitude of sins on your part.

7. THE ADVOCATE MUST WIN FOR BOTH OF YOU
Unlike any other avenue you may choose, the Advocacy Service is the only one where you are both committed to a positive outcome. The many hours invested won't pay them a cent unless they get a result you are happy to accept.

8. SOME ADVOCATES CAN HELP YOU FIGHT IN COURT WITHOUT A LAWYER
There is nothing scarier to an insurance company than a policyholder fighting them in the High Court without a lawyer. The process takes longer, they spend a lot more, and they know you're not incurring any costs. They also know that if you lose, they may never recover their costs from you. Decline's advocate has successfully won High Court and District Court cases without a lawyer. The High Court case was settled at a Judicial Settlement Conference. At the outset of the conference, the Associate Justice explained to the other side that they would be the loser whatever the case's outcome. The entire conference was spent working out how big a six-figure settlement would be paid.

Why don't you run your claim past an advocate? You have nothing to lose. 

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