Following on from my recent article about the timing of disclosure and its potential challenges, I've been asking some specific questions of insurers.

The responses to this have been surprising and not surprising, with three insurers not responding and the bulk of insurers having vague responses.

What was the question?

When does a client's responsibility for ongoing disclosure at application stop?

The bulk of the answers have the been expected; the date the policy is issued. Which, on the face of it, sounds perfectly reasonable.

Let's stop for a second and consider that:

• That date, is it reasonable?

Why do I ask that question? In our insurance law, a provision obligates insurers to process the insurance application reasonably.

This is both for the terms of the policy as well as the time taken to process the application.

We have all been exposed to the increasing delays with insurers processing things; I had one insurer state today that their turnaround time for responding to an email to claims is 18 days!

This means that the timing of processing once cover is accepted, by the insurer as standard or the client with terms, becomes a concern for disclosure.

If it's going to take the insurer 2-3 weeks to process and issue cover, then that's a long time for something with the client to happen!

I recall one client with an adviser I used to look after as a BDM, where the cover was accepted and issued on a Friday (the good old days of same-day processing!). The client went backwards out the window from the second floor on the Saturday night housewarming and put themselves permanently in a wheelchair.

So while some of you may be considering this more of J-P doing obscene things to spiders, there are real-world reasons for my attention to this.

This example highlights how problematic an approach to policy issuing being the "date it's processed" on the insurers' system when it can take the insurer two weeks to get around to it.

In the above example, would the insurer pay the claim if they had yet to process it in time? Probably. This sort of thing would be unreasonable in the press to have public; at the same time, the insurer would be within their standard processing to decline it as the policy wasn't issued.

This demonstrates the significant spectrum we have to work with and manage, representing a risk we have to consider and manage.

With the responses I have had, I'm most impressed with Fidelity Life's approach.

The client's requirement to disclose a change of health in the application and underwriting process ceases at one of two points:

1. When the insurer offers the cover at standard rates with a completed payment authority or payment of the first premium.
2. When the client returns the accepted terms to the insurer with a completed payment authority in place, as above.

And the wording around that isn't the day or date, but the moment.

Meaning clients have a very clear and defined disclosure period that is not impacted by the insurer being tardy with processing the policy for issue and producing policy paperwork.

Conversely, the worst one to date has been AIA, where on page 6, paragraph 2 of the current underwriters' guide (Nov 2022), it states: "Their duty of disclosure extends to the date the insurance is concluded between us."

The example that follows that sentence talks about the underwriting process; however, taking that as the literal statement, you could be mistaken in thinking that client disclosure is all the way through the contract until it is claimed or cancelled…

Different from what's intended, at the same time, it highlights a significant range and lack of specificity with the documents and processes we have to work with.

Not to mention that the question generated a concerning amount of fluffing around with most insurers. Meaning the question wasn't able to be simply and directly answered by some insurers, requiring the involvement of more senior people than the front line.

This sort of issue and question should be an obvious, well-documented part of the insurers' operating process.

Insurance contracts and contract law are a fundamental core piece of what we do. When the client is covered, and the insurer is on risk, is pretty damn fundamental!

Sure, I may be splitting hairs and being unreasonably detailed here, but at the same time, that's how it's looked at until there's an issue and someone is impacted.

Today, I would hate to have my client go out the window on Saturday night after moving into their new home after accepting terms on Friday. I have little confidence (except Fidelity Life) that they would be covered for their claim.

But then again, I'm a noisy pain in the arse, so they would probably pay for that one ;)