Bright Grey and Scottish Provident held a recent summit on the future of critical illness cover. Roger Edwards outlines its conclusions
It is often thought that this practice of adding conditions is not always the right thing to do, but if you do not have a long list of illnesses you tend to fall off adviser panels.
The competitive pressure is that you add illnesses and, admittedly, an increase in conditions often accompanies an increase in sales. But how much benefit is this really to consumers?
Another key recommendation from the summit was that advisers could look towards recommending a smaller-sum CI policy linked to a life policy.
Advisers in the audience were in agreement, with one saying it had transformed the number of sales he had completed in the past couple of years.
Perhaps it should be routine to add £20,000 worth of CI cover to every life cover, to make it more affordable in the current economic climate.
But we would need to ensure the small amount of CI did not cause an underwriting hold-up.
So, an easing of underwriting and the need for GP reports on this £20,000 would be essential.
The Mortgage Market Review (MMR) was identified as a big threat to CI sales by Kirwan.
He remarked that the thrust of the MMR is to put much more of an obligation on advisers arranging mortgages to ensure that clients can really afford the mortgage they are taking out.
That means a more in-depth analysis of a client’s income and expenditure, which means a much longer mortgage sales process.
How much appetite is someone going to have at the end of that process to talk about protection? Roy McLoughlin, an IFA with Master Adviser, said that clients only have a limited time they can spend with an adviser. If the process is elongated, the danger is it will put people off.
McCarthy made the point that consumers have many priorities and they see protection in a much broader spectrum – from PMI cover, death cover, mortgage cover, to compulsory motor insurance, for example.
To a consumer, CI is just one part of the spectrum. They need to understand better the perceived value of CI.
McCarthy also suggested that the process of selling needed to be adapted to changing consumer behaviour and circumstances.
He said the industry cannot fail to make a link between costs and the event covered – the fact that claims for CI are more frequent than a life insurance claim. He felt that consumers needed the difference between “living” benefits and “death” benefits explained to them.
Collett was concerned customers were still being caught out by the division between mild and severe stroke, heart attack and cancer.
