Nicola Culley examines recently launched individual critical illness plans that typify both poles of the market.
“We are consistently reviewing it and we are looking at adding to our existing conditions and definitions but only as the process is developed alongside it to support it. So we want to add as much as we can as determined by the capability of our systems and to keep the process easy.”
Gledhill said the natural default of the industry was to go to the GP if more details were needed. He added there was space for insurers to do more about this themselves before referring to a GP.
The industry has been flagging up the dangers of adding superfluous conditions to individual CI cover for some time, under the heading of unnecessary increasing complexity, no added value and unsustainable chasing of slightly larger market share.
New regulator FCA has said its focus will be on outcomes as opposed to the FSA’s scrutiny on compliance and regulation.
Interpretation suggests that consumers will now hold all the power with the regulator, in that if they do not get the outcome from a product that they deem reasonable, regardless of whether they have signed a policy document, the FCA will lean towards the consumer’s concerns rather than the provider’s signed legal document.
Mark Hughes, financial adviser at Mark Hughes and Associates, said having a regulator now looking for desired outcomes meant providers had a huge responsibility to create products that were clear and catered to consumer understanding.
He said: “Consumers are abysmally unaware of meeting their own financial needs. With CI, as an adviser I am confused many times, never mind if I was a consumer.
“I do not like the basic products from the likes of Beagle Street. Consumers are just not clear on what taking out that cover means. They think they are in an all-encompassing plan but they simply do not have cover in the way they think. It is such a narrow claims definition that you will not meet the criteria for pay-out in many cases.”
While Hughes believed some cover was better than none, he said CI was a complex product and it was easy for consumers to mis-understand exclusions and implications of the definitions.
In an ideal world, Hughes said, everyone would opt for Skandia’s top-end full cover. But in reality, he stressed, everything came down to money and client resources which meant there would always be a clear place for middle-ground CI products in the main.
