Return to the menu Financial hardship

  • Case study: Financial hardship

    Select Start to begin.

    Start

    Arlene Wilson owes money to your insurance firm as she has made a claim and needs to pay a $1,000 excess.

    Arlene: "Look, the issue is I'm experiencing a little bit of financial hardship because I've recently lost my job, and to add to the pain of it all, I just got some big bills.

    Are you able to help?".

    How do you respond?

    "Ahhh…that’s a relief. I’ve heard so many horror stories. It’s great to hear you’re willing to help".

    Arlene sounds please with the resolution. Is there anything else you can do?

    "That’s wonderful. You’ve been such a great help. Thank you so much. You’re an absolute lifesaver".

    Nice work on receiving such praise. What's another choice you could make to ensure the same positive reaction?

    "Well I'll be approaching some current affairs programs about this. You people have absolutely no feelings".

    "I'm down to my last dollar and you're not willing to help! I thought you people were different to other insurers but you’re all the same".

    Hmmm…

    Review section 8 of the Code and re-think your response.


  • Checkpoint

    What is some of the additional information requested in this form to assist the insurer you work for in determining financial hardship?


    Checkpoint

    Refer to Section 8 of the Code to assist you answer this question.

    After receiving Arlene’s claim for financial hardship assistance, your organisation determines her entitlements.

    What are some example payment arrangements that your organisation could organise to assist Arlene?


  • Checkpoint

    If a customer had a home loan with a bank, why would the insurance company need to advise the bank of the customer's insurance policy?

    What would you do if a substantial payment was involved and no financially interested party was noted on the policy records?


  • Third Party Hardship

    George Karamboulos becomes unemployed and has to rely on income from unemployment benefits.

    A couple of years ago, George was in a car accident for which he was responsible and the other driver's insurer organised for George to pay the damage debt of $50 a week over 3 years (in order to recoup its costs).

    Upon being informed of George's dismissal, the insurer negotiates an alternative payment arrangement until he gets another job and can resume payments.

    As the third party in the motor vehicle accident, George need to cooperate with the insurer to find a mutually acceptable financial solution. Additionally, the insurer needs to abide by certain Code guidelines and provide George with different methods of assistance with his financial hardship.


    Checkpoint

    What would be some examples of 'other reasonable causes' of financial hardship resulting in an inability to repay debts?

    What could the insurer do to assist a third party having difficulty repaying a debt due to financial hardship?


  • Case study: financial hardship

    Consider the following two case studies which highlight how customers may experience financial hardship.

    Respond to the questions with regard to how the insurer dealt with the insured.

    You are a claims handler for an insurance company. One morning you receive a telephone call from Peter Yeo advising you that during the night the house in which he, his wife and three children live was totally destroyed by fire. Their family car, also insured by your company, has been badly damaged. The fire brigade considers the fire to be caused by an electrical fault.

    He informs you that all the family has left are the night clothes they are wearing. As they have recently arrived from overseas, they have no family or friends to offer them immediate assistance. Peter asks about the procedure for lodging a claim for the damage to the house, contents and car.

    The very next call you receive is from Meena Tabriz, who has a Home and Contents policy with your company. Meena is a single parent with responsibility for the full-time care of her two young children. She is calling to advise you that her flat has been burgled.

    Meena explains that her TV, video player and some jewellery have been stolen. She also tells you that her housekeeping money of $500 cash was taken and that this was the money put aside for the weekly food shopping and payment of her electricity bill, which is now overdue. She has no other funds or access to credit cards.

    What will be your advice to both Peter Yeo and Meena Tabriz? How will you be able to assist them, and what steps will you now take with each claim in accordance with the requirements of the Code?

Third party

A 'third party' is a non-insured party from whom an insurer may be seeking recovery (or part recovery) of a payment it has made for a claims event

x

Guidelines

The code states that an insurer:

x

Methods of assistance

The Code goes onto provide possible methods of assistance if the insurer determines that the applicant is entitled to financial hardship assistance.

They are:

x