Topic: Misrepresentation in Protection Insurance
Host: Phil Deacon, Phil Deacon Consulting and IPTF Claims Workstream Lead.
Participants: Representatives from across insurance, reinsurance, claims, and financial advice:
- Tom Salmon – Senior Claims Assessor, Pacific Life Re
- Justin Garbutt – Sales Director, Vitality
- Charlotte Rodgers – Adviser, Radcliffe & Co
- Paul Young – Development Underwriter, Scottish Widows
- Cameron Erskine – Adviser, SeventySeven Wealth Management (SJP)
- Dan Kellegher – Adviser, Lifesearch
Understanding Misrepresentation
Misrepresentation occurs when a policy applicant (or their adviser) provides incomplete, inaccurate, or dishonest information during the insurance application process.
This often relates to:
- Medical history
- Smoking or lifestyle habits
- Drug or alcohol use
- Age, occupation, or income
These disclosures are critical because underwriting decisions and pricing rely on accurate information. One key point raised during the discussion was that misrepresentation is not always intentional.
“Misrepresentation isn’t always someone lying. Often it’s a misunderstanding of dates, symptoms, or what the question actually means.”
Another panel member emphasised that most cases fall into the careless category rather than deliberate deception.
“The vast majority of misrepresentation falls into that middle careless category… and on that basis it can be avoided.”
Is Misrepresentation Increasing?
The panel discussed whether misrepresentation is increasing and identified several structural industry trends that may contribute to it. These include:
- Digital distribution models
- Straight-through processing (STP)
- Simplified application journeys
- Telephonic sales
- One-call protection sales
These developments prioritise speed and efficiency, sometimes reducing the depth of questioning during the application process. As one participant noted:
“Every company measures themselves on straight-through processing rates… but that can reduce the depth of questioning.”
Another highlighted the tension between speed and accuracy:
“There’s pressure to get a case on risk quickly rather than ensuring the client has the best chance of a claim being paid.”
Reframing the Adviser’s Role
A recurring theme in the conversation was that advisors should not focus solely on placing a policy quickly, but rather on ensuring claims can be paid successfully in the future. As one participant summarised:
“An adviser isn’t there just to get a client on risk. They’re there to make sure a claim gets paid.”
Advisers therefore have a crucial role in:
- Challenging incomplete answers
- Ensuring customers understand application questions
- Encouraging full and accurate disclosure
Many advisers described taking 30–40 minutes to complete applications properly and reviewing each question individually with clients.
Customer Engagement Challenges
The industry relies heavily on customers checking and confirming their application answers, yet the panel acknowledged that many customers fail to do so. This creates a risk of:
- Careless mistakes
- Missed disclosures
- Misrepresentation only being discovered years later at claim stage
As one speaker observed:
“A lot of the disclosure isn’t necessarily deliberate… it’s that they’ve forgotten or thought it was a minor thing.”
Improving customer engagement during the application process was seen as a key opportunity for improvement.
Why Customers Fail to Disclose
Several behavioural factors contribute to misrepresentation.
Fear of negative outcomes – Customers sometimes withhold information because they fear it will affect pricing or eligibility.
“Clients sometimes don’t disclose minor things because they think it will affect their premium or result in a decline.”
Misunderstanding significance – Applicants may not realise that seemingly minor details are important.
“They see something as insignificant, but from an underwriting perspective it matters.”
Sensitivity of certain topics – Topics, such as those below, can make customers uncomfortable discussing them openly.
- Mental health
- Drug use
- Lifestyle habits
Adviser Training Gaps
The discussion also highlighted gaps in advisor training. While many advisers receive extensive training on products, they often receive limited training on how to ask underwriting questions effectively. As one panel member explained:
“We train advisors on products — but how many are trained on how to ask underwriting questions?”
Another added:
“You might get two or three weeks of training, but none of that is about how to delve into difficult disclosure questions.”
Improved training in underwriting conversations was widely seen as an important step toward reducing misrepresentation.
Direct-to-Consumer Challenges
Direct-to-consumer (D2C) journeys present additional challenges because there is no advisor present to clarify questions or probe deeper. This can lead to:
- Misunderstanding of questions
- Incomplete disclosure
- Incorrect answers provided unintentionally
Looking ahead, participants suggested that AI-driven conversational underwriting journeys could help address this.
“In the future, underwriting journeys will be far more conversational.”
“AI could help ask questions dynamically and draw out better information from customers.”
The Role of Post-Issue Sampling
Post-issue sampling – reviewing applications after policies are issued was highlighted as a valuable industry safeguard. It helps:
- Identify misrepresentation early
- Prevent issues emerging at claim stage
- Improve application questions and underwriting processes
As one participant noted:
“Post-issue sampling lets us identify misrepresentation early rather than discovering it years later at claim.”
It also provides insights into trends across insurers’ books of business.
Operational and Financial Impact on Insurers
Misrepresentation has significant operational and financial implications for insurers. Operational impacts include:
- Additional medical evidence requests
- Complex claim investigations
- Multi-team involvement (claims, underwriting, legal)
Financial impacts include:
- Incorrectly priced risk portfolios
- Increased claims management costs
- Potential complaints and disputes
However, the panel stressed that the biggest risk is reputational.
“If people believe insurers don’t pay claims, they stop buying protection altogether.”
“The biggest risk isn’t just financial — it’s the reputational risk to the industry.”
Impact on Customers and Claims
Claims professionals spoke about the emotional impact of misrepresentation cases.
“There’s nothing more frustrating than supporting someone through a claim and then discovering misrepresentation at the end.”
“It’s not a nice call to make when you have to tell someone their claim can’t be paid.”
These situations are particularly difficult when a policyholder has died and the insurer must speak to surviving family members.
“It’s much harder when the person who misrepresented has passed away and you’re speaking to their spouse or family.”
In extreme cases, declined claims can have major financial consequences for families.
“You’re explaining something that could mean they lose their home — those are incredibly difficult conversations.”
Customers Often Accept Honest Underwriting
An important insight from the discussion was that customers are often more accepting of underwriting decisions than advisers expect.
“Most clients accept increased premiums or exclusions when we explain them properly.”
This suggests that avoiding disclosure out of fear of adverse terms may be unnecessary.
Key Industry Solutions
Several solutions emerged from the conversation.
Education – Education was the most widely agreed priority. “There’s a clear theme here: education.” This includes:
- Educating advisors
- Educating customers
- Improving industry communication
Better adviser training – Particularly around:
- Asking sensitive questions
- Explaining underwriting outcomes
- Communicating exclusions
Improved customer understanding – Greater clarity about the consequences of misrepresentation.
“People need to understand the consequences of misrepresentation before the policy starts — not at claim stage.”
Final Reflections
While misrepresentation cannot be eliminated entirely, the panel agreed that significant reductions are achievable. Even small improvements in the advice and application process could have a major impact. As one participant concluded:
“A small effort at application stage could save a huge amount of frustration later.”
Another summarised the opportunity for the industry:
“Little changes in the process can make a big difference.”
Overall Conclusion
Misrepresentation affects everyone involved in the protection insurance ecosystem — customers, advisors, insurers, and the wider industry.
However, the discussion made clear that most cases are avoidable careless errors rather than deliberate deception.
Through better education, improved advisor training, clearer customer communication, and smarter technology, the industry can significantly reduce misrepresentation and improve outcomes for customers. You can watch or listen to the full video below:
