The Claim Assessor's Deadline
A claim assessor receives a KES 4,000,000 death claim on a 5-year-old policy. The file is complete except for one item: the hospital's certified cause-of-death report, which the hospital says will take 10 working days. The insurer's published service standard promises a decision within 15 working days of a complete claim. The beneficiary is the deceased's elderly mother, who is calling daily and becoming distressed. On day 12, the assessor's manager instructs her to 'close the file as declined for non-cooperation' so the insurer can meet its service standard, and to reopen it if the report arrives. The assessor knows the beneficiary has cooperated fully and that the hospital, not the beneficiary, is the source of the delay.
1. Should the assessor follow the instruction? Identify the ethical and regulatory issues, and explain what the assessor should do instead.
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The assessor should not follow the instruction. Declining the claim would be a false statement made to meet an internal target.
1. The decline would be dishonest. 'Non-cooperation' is a factual allegation. The beneficiary has cooperated fully; the delay is the hospital's. Recording a decline on a ground the assessor knows to be untrue is a misrepresentation of the file, and would be relied on by the beneficiary and potentially by a regulator or ombudsman. It is not a 'technical' closure.
2. It harms a vulnerable claimant. The beneficiary is elderly and distressed. A decline letter would cause real harm and would likely be reversed on complaint - but only after the harm is done. Vulnerability increases, not decreases, the insurer's duty of care.
3. It breaches conduct standards. Insurers are required to handle claims promptly, fairly and in good faith, and to give reasons that are accurate. Using a service standard as a reason to decline a valid claim inverts the purpose of the standard. Regulators treat 'target-driven' claim denial as a serious market-conduct failure.
4. It exposes the insurer and the assessor. If the report later shows a payable claim, the insurer faces a complaint, possible interest on the delayed payment, regulatory sanction, and reputational damage. The assessor, who knew the ground was false, has personal exposure.
What the assessor should do:
- Record the true position on file: claim complete except for the hospital report, expected in 10 working days, beneficiary cooperating.
- Write to the beneficiary explaining the delay, the reason, and the expected decision date - this manages the service standard honestly.
- Escalate the manager's instruction in writing to compliance or the claims head, framing it as a request for guidance on a target conflict.
- If the insurer's service standard cannot be met for reasons outside its control, the correct response is to notify the beneficiary and, if the standard is regulatory, to explain the delay - not to fabricate a decline.
The principle: a service standard measures speed; it does not license dishonesty. Where the two conflict, honesty wins and the standard is reported as missed with reasons.
2. Suppose the hospital report arrives on day 20 and shows the death was from an excluded cause. The insurer now wants to decline. What are the fairness issues, and how should the decline be communicated?
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The decline may now be justified, but the process still matters.
1. The ground is now real. If the cause of death falls within a valid exclusion, the insurer has a genuine basis to decline. The earlier instruction to decline for non-cooperation is now irrelevant and must not appear anywhere in the file; the decision must rest on the exclusion alone.
2. Fairness issues:
- The delay. The beneficiary waited 20 working days, past the promised 15. The insurer should acknowledge the delay and apologise, even though the outcome is a decline.
- The earlier communications. If the beneficiary was told the claim was 'being processed' or was given no reason for delay, the eventual decline may feel like a trap. The insurer should ensure the decline letter explains the sequence clearly.
- The exclusion's clarity. The insurer must show the exclusion was clearly drawn to the policyholder's attention at sale. If it was buried, the decline is vulnerable.
3. How to communicate:
- A written letter, in plain language, stating the decision, the precise policy clause relied on, the factual basis (the certified cause of death), and the date of the decision.
- An apology for the delay, with the reason (hospital report awaited), and confirmation that the delay did not affect the outcome.
- Clear information on how to complain, the internal complaints process, the ombudsman or regulator route, and the time limits.
- A named contact for questions, and an offer to discuss by phone given the beneficiary's age and distress.
- No mention of the 'non-cooperation' instruction. The file should record that the earlier proposal to decline was withdrawn as unfounded.
The lesson: a correct outcome reached through a flawed process is still a conduct failure. The insurer must be able to show that the decline was based on the exclusion, communicated fairly, and not contaminated by the earlier target-driven instruction.