BU insurance: Despite all the transparency of obligations, freedom is needed

November 21, 2022 – A market analyst has set out to create more transparency and legal certainty by reorganizing obligations in disability insurance. In the new model, the text of the obligations is longer than usual. Above all, the description of the professional activity is much more detailed. There are also regulations on sanitary restrictions, their occurrence and the evidence of it. Together with the insurance broker Guido Lehberg, the biometrics expert Philip Wenzel took a critical look at the regulatory and transparency criteria.

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There is no doubt that the UB insurance benefit case is a complex issue and the processing requires a high level of competence.

Philip Wenzel (Image: Doris Koehler)
Philip Wenzel (Image: Doris Koehler)

This is solely due to the fact that there are already several thousand job descriptions that can also be practiced in many different ways. And these probably already a hundred thousand activities can again be restricted by several thousand diseases (also in any combination of each other).

More transparency and legal certainty

Creating more transparency and legal certainty here is an ambitious task. And it is also to the credit of Premiumcircle Deutschland GmbH that it has dealt with this issue: the regulation of the obligations that the insured person must comply with in the event of a claim under the insurance conditions. Analysts have defined 21 best performance criteria for this area.

This will now be examined in more detail below. First of all: in my opinion, it is completely logical that the first formulation of more transparent and legally secure obligations is considered an ambitious attempt. Therefore, only constructive criticism is appropriate in the following.

Also, this review only reflects my opinion. Because I am of the opinion that it is not necessary to simplify the conditions. That would be like writing the Civil Code so that anyone can defend themselves in court. But there are lawyers for that. And in the event of a claim, there is a well-trained intermediary or well-trained insurance adviser.

Because every time I simplify something, something falls behind.

Obligations held verbatim longer than usual

Guido Lehberg (Image: Sebastian Berger)
guido lehberg
(Image: Sebastian Berger)

To achieve a little more objectivity, colleague Guido Lehberg, insurance broker and BU expert, was asked for his opinion. He should always have his opinion here.

But one after another. If no one had told me that the obligations were structured differently, I probably would have quickly realized that they deviated from what I was used to. They lasted much longer than usual.

In this sense, Guido Lehberg noted very positively that the obligations are a bit straightened out and therefore more pleasant to read. This has also made them easier for laymen to understand. Also, the BU expert really likes the look and thinks the text is readable.

Detailed description of the professional activity profile

Above all, the description of the professional activity is much more detailed than usual. Therefore, it is easy to imagine that a curious policyholder has a good starting point to understand what has been described.

In my opinion, the associated form of the tabular schedule can be confusing, especially when there are seasonal fluctuations at work. But the Federal Court of Justice requires it and most employees should be able to fill this table.

Lehberg adds that the complexity of the benefits case can be a handicap, and a stricter corseting of the documents that must be submitted could certainly provide more clarity in some cases. “But we must not forget that BI insurance itself must be a very complex product, because it covers a specific activity that is carried out today and in many cases also in the next three or four decades,” she says.

“The complexity and flexibility ensure that new job descriptions with new professional challenges are included. In such cases, a ‘conditioning corset’ may not be up to the task if it’s too tight.”

Clear words don’t always make it easier

It should be noted that a specific and unambiguous wording cannot be interpreted in different ways. That is strength and weakness at the same time. If, for example, the obligations establish that a description in text form must be presented to register the benefit, an insurer that is not well disposed towards the insured could refuse to teleclaim and insist on the description in text form.

Lehberg also believes that there may be additional, easier options for verifying claims in the future, but that an insurer may reject such options. However, he emphasizes that he does not want to accuse any insurer of anything, but “we also do not know who will be ‘in charge’ in 20 years and how they will apply the obligations then.”

The new regulation also establishes that “each and every one of the causes” must be specified. In fact, in some cases it would also be sufficient to indicate the only cause that significantly limits the ability to work.

Transparency is not the new synonym for good

In this context, I understand the intention to signal to the client in clear words what to expect. But in my eyes, that doesn’t really make it any more transparent.

Here Lehberg disagrees, who sees the obligations as a result more transparent, but doubts whether they have generally improved as a result. “Because transparency is not the new synonym for good,” says Lehberg.

And if the client indicates the time when the deterioration of health first occurred, that is also more understandable than requiring the client to claim that incapacity for work has occurred. However, the latter then remains in the hands of the insurer. And that can mean something good with a good insurer, but something bad with a bad insurer.

Evidence not retroactive to birth

In my opinion, the interference of the BI insurer can often help. Because all this is new for the insured and he does not know what the consequences of a single statement made will be.

That’s why I don’t really understand what is supposed to help if the doctor’s letters and reports are only required retrospectively to the aforementioned time when the disease started. This is probably due to the fact that a “bad insurer” does not want or should not know everything that has nothing to do with the decision on benefits until birth.

But, what if the insured gives the wrong time? Can the insurer still request documents because the current documents show that the disease is older? And if she is allowed, why is that even in the conditions?

Here I think you can do more harm than good to the customer.

matter of necessity

Guido Lehberg explains: “In my opinion, the insurer has to justify something more if he wants to know more. But paper is patient and an insurer that does not want to pay will find ways and opportunities. An example of this is the specification that the insurer can commission a maximum of one medical examination per medical specialty That sounds good, but what exactly does that say about the scope of this investigation?

Well, the insurance company can only request this if a final verification is not possible based on the documents submitted by then. This is also up to the insurer to decide. If the insurance company doesn’t want to, they will find arguments why the documents are not enough.

In other words, it is better written in terms and the average policyholder can better understand what is being asked of them. However, for the reasons mentioned above, I cannot see a concrete positive effect in the case of a claim.

And I also don’t see the question of necessity, because which benefit cases specifically have not been paid in the past or have been significantly delayed, which ones would now be paid (faster) as a result of these changes? I view this with good will in the 0.0 percent range.”

academic discussion

Long story short, we’re having a pretty academic discussion here. Because the benefit of newly formulated obligations depends on whether a client or an agent reads the text. And since transparency is mostly achieved through more text, the broad impact can certainly be questioned.

However, if the obligations are actually read, they generally give a clearer picture of what happens in the event of a loss than the above conditions. And in a simple case, the client can even successfully apply for the service himself.

In more complex cases, however, the expertise of the insurer is often required to prove the claim. Sometimes an inspector looks at the situation on site to get an idea, or the insured person sends a video showing them loading their delivery van.

For these cases, freedom is needed despite all transparency. This should be kept in mind when developing this idea further.

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