Individual critical illness saw a relentless pace of change last year. But has the industry gone far enough? Fiona Murphy investigates.
Where next for CI?
Where next should the industry turn when thinking about innovating or reforming its CI proposition? For Thomson, funeral benefit in children’s policies needs a revisit.
She said: “Those that have done it should increase it. £5000 of funeral benefit is not much for a child. While someone shouldn’t profit from their child dying, I think something sensible such as £10,000 to £15,000 to put on the funeral and take unpaid leave recuperating from the devastating loss of their child [would be better]. I don’t think £5000 does enough to support families going through that awful trauma.”
Thomson added that Total Permanent Disability, which was due a revamp, needs the industry to come together to change it.
She said: “One thing the industry tried to tackle but didn’t really achieve was looking at TPD again. Although consumers do get payouts for TPD, it is one of those misleading areas where many consumers get confused between TPD and IP. I think other providers should follow those that have tried to bridge the gap between CI, such as Ageas and Zurich.
“A lot don’t want to or can’t afford to take out both, and most brokers sell CI because it’s an easier sale. If you’ve got a customer with CI, there’s nothing to protect income. Given the IP market’s move to own occupation, more policies need to be underwritten on that basis for TPD and TPD needs to be reformed.”
For Lakey, going back to how insurers rewrite definitions would be the ideal scenario – giving insurers’ introduction of Devic’s Disease, a motor-neurone condition, as an example.
He said: “My belief is that companies go about this the wrong way. Let’s imagine 19% of all motor disability claims are caused by MS, then you’re going to have Spinal Muscular Atrophy, Parkinson’s Disease, Devic’s Disease; in their different ways, they all create problems in walking, moving and speech.
“Effectively, they are kind of the same condition in that the outcome is the same. If a sensible human being started from scratch, they might not say ‘let’s not worry about what the disease is called’. It’s the outcome, not the name of the condition.”
Michael Aldridge, sales director at London & Country Mortgages, concluded that the industry needs to fight to get key messages out there to fill the protection gap. He said: “We’ve still got to continue to get the message out there about the importance of illness cover, whether that’s CI or IP. Aviva was great with its advertising.
“In terms of smartening up the contract, you’ve seen emerging over time a move from Pru Protect’s Serious Illness Cover to the more standard CI contact meeting somewhere in the middle. They’ve been moving closer with partial payments. You can’t do a lot else with the contract other than making the definitions simpler instead of having 64 illnesses covered and 40 ABI+, making those core conditions really clear and the industry is going towards that.”
