Critical illness is a product beset by complexity - a situation not helped by a raft of changes set to arrive next year, says Edward Murray.
This year is billed as a big year for the UK. With the Diamond Jubilee and Olympic circuses set to roll into town shortly, it is easy to see why. But for the critical illness (CI) market, 2012 is likely to go down as more of a holding year in which the runners and riders ready themselves for what lies ahead in 2013.
Changes introduced by the government that kick in from next January will have an impact on the way CI providers are taxed. In turn, this will affect on the pricing of their products.
In addition, the gender ruling from the European Court of Justice (ECJ) means that from late December, a person's sex will not a permissible underwriting factor. Again, policy pricing is likely to fluctuate dramatically on the back of this.
There has been a lot of conversation and conjecture on these issues. But until we see the changes in action, it will be difficult to know for certain the effect they will have.
ON THEIR MARKS
Steve Casey, Friends Life's head of marketing and intermediary proposition development for individual protection, said: "In the first quarter of next year, there is going to be a real push as providers look to place themselves in terms of how they price and position their business in the market." For advisers working in the CI space, this movement should hopefully bring opportunities in terms of both new products and revised pricing.
In the meantime, advisers could look to speak to as many female clients as possible. This is because anecdotally, the gender ruling is expected to create a double-digit percentage rise in CI rates for women. The here and now represents a real opportunity for this sector of the market.
Ahead of the expected alterations next year, there are already a number of product changes taking place as providers look to keep on the right side of the Association of British Insurers' Statement of Best Practice for CI.
Although this document was published last February, it gave ABI members until the end of this year to comply. In truth, it is unlikely that this in itself will drive huge changes in the policies offered, but it will make small differences. Casey said: "The reality is that most providers have already implemented the changes and we have only one small change to make regarding Total Permanent Disability, which we will take care of a little later this year."
