The protection industry has responded to the ABI's best practice guidelines on critical illness definitions.
The main changes to the previous Statement are:
- Clarification of Additional and Partial payments.
- Clarification of additional cover at policy level.
- Updates to model definitions to improve clarity and/or take account of advances in medicine
CI product providers have until December 2015 to ensure they are in line with the statement.
Insurers 'welcome' guidelines
Ian Jefferies, head of protection, Old Mutual Wealth,said: "The latest Statement from the ABI contains a number of changes that although not radical, are a helpful framework against which customers can have clarity on what to expect from Critical Illness cover across the industry.
"The onus remains with providers to go above and beyond the ABI framework to drive up the quality of their cover and ensure customers are fully aware of what their policy covers and what is does not."
Jennifer Gilchrist, senior product development Manager for Bright Grey, part of Royal London Group said:"We fully support the work the ABI is doing to make critical illness definitions as clear as possible for consumers. Royal London's protection businesses - Bright Grey and Scottish Provident - focus on customer outcomes and we firmly believe in making the cover as comprehensive as possible where it really counts for the customer.
"In some areas, provide cover beyond the ABI's definition to make sure we maximise the claims we pay. This enables us to better meet customers' expectations. Royal London will be making changes to its definitions before the deadline of December 2015."
Dougy Grant, protection director at Aegon said: "We will have these changes implemented well before December 2015.
"Our goal is to ensure people include protection in their financial planning so they have a safety net in place should the unthinkable happen. Despite a reduction in declined claims, trust continues to be an issue for customers when it comes to protection. Hopefully these new guidelines will help us as an industry give more people the confidence to put the right protection in place."
Steve Casey, head of marketing & propositions at Ageas Protect said: "Ageas Protect welcomes the publication of the Statement of Best Practice for Critical Illness by the Association of British Insurers.
"We welcome any move that helps consumers understand and compare critical illness policies and provides greater clarity for intermediaries as well. We will be assessing the implications for our product development programme next year."
Phil Jeynes, head of account development & Public Relations at VitalityLife said: The new guidelines are a good move forwards and serve to formalise many of the changes insurers have made to their products over recent months; particularly in terms of improved definitions and the introduction of partial and additional payments.
"Following the launch of our severity based Serious Illness Cover in 2008, nearly all traditional providers have added partial/additional payments to their CI contracts. The ABI's attempt to clarify these options indicates that there is confusion in the market as to how these options work in practice.
"A full severity based approach provides clarity for consumers, giving them confidence that whatever the seriousness of their condition their insurance will make a payment while also allowing multiple claims.
CIExpert view
Alan Lakey, director of CIExpert decribed his rection to the statement as "mixed."
He said: "There's a part of me that wonders if the ABI statement of best practice serves any purpose in continuing. When they construct a wording, it's something that 75% of its members includes within its policy. They've got 23 definitions but there's actually 72 conditions out there (including terminal illness). They're not even covering a third of the conditions. If it's important to have a generic clarification - the question is, should they go further than this or not even bother?
"Doing 23 out of 72 conditions doesn't really scratch the service. The concern I've had for years is if the ABI - by mandating a minimum wording and every company follows that, we've got a homogenised wording and a market based on premium as every company would be effectively the same. It reduces the ability of the adviser to be the advocate of independent advice."
He continued: "There's a lot of semantics in the changes they've done. Partial payment is understood - if you say ‘additional payment' - if it had been me setting up the wording, I would have said an ‘Additional partial payment.' I'm not sure that's helped. I think we're in danger of confusing ourselves to some degree.
"Every company apart from NFU Mutual and Forreseters - out of 23 insurers, 21 can say they are ABI plus, which is misleading and nonsensical.
Lakey concluded: "Looking on the bright side, it's a great idea to have commonality of language and generic terminology such as clarifying technical terms such as ‘permanent'.
