We saw a lot of changes to critical illness (CI) products last year. Do you think these changes presented a meaningful difference, or was it a case of change for change's sake?
Kevin Carr, Protection Review
2013 was the year of CI product changes, with dozens of improvements and tweaks being made throughout the year.
Thankfully, many focused on the quality of cover and improved a range of areas including: children's cover, partial payments, ABI+ definitions, and re-defining criteria for conditions such as heart attacks and strokes, all of which continue to improve the product.
CI Expert said: "The changes were 99% positive and this can only be good news for consumers and advisers." With more than 90% of CI claims being paid and with the mortgage market more buoyant than for a long time, protection should remain high on the adviser agenda, not just because it is financially worthwhile, or because it increases the future value of the business, or because commission still exists, but because it is often the right thing to do.
Does it make a meaningful difference? Yes. Just about every adviser I've spoken to is in favour of the changes. Judging by some of the consumer press coverage towards the end of last year, the product seems to be moving away from the negative headlines that have caused so much doubt over the years.
Whether or not it all gets through to consumers is another matter. We can hope so, or we can make it so. I prefer the latter, but we need to do a lot more to convey important messages.
Alan Lakey, CIExpert
Last year was the first year I can recall where the bulk of companies decided they would upgrade quality, and compete on quality rather than just price.
Even companies that haven't previously competed with us or do not sell via independent advisers have done so. For example, HSBC upgraded its plan, adding more conditions and using market-leading definitions.
We need to ask whether consumers are better off under the changes you have introduced.
Last year we saw some good things such as children's cover being upgraded with death benefits. We also saw companies saying, "We recognise our rather severe ABI definition for blindness is more restrictive than the NHS term for blindness, so we're either going to change our wording or bring in a severe loss of sight wording, which is more generous admittedly on the partial payment."
Then you look at what companies are doing with the more likely pay-outs. Take heart attack, for example. Insurers have reduced or removed the need for enzyme-level increases.
This is very welcome. I've spoken to a number of reinsurers on this. The general view is a company that doesn't have any requirement for a raised enzyme level is about 10%-12% more likely to pay a claim than one that does.
Then you get other firms such as Ageas that have revised the definition of stroke as not requiring necessarily permanent symptoms. We're moving in a direction where claims are more likely to be paid, which has to be the gauge we use as to whether a plan is good or not.
