As the ABI examines publishing claim statistics on short-term income protection (STIP) policies, British Friendly's Mark Myers says we need greater clarity on these plans.
Different views
While the term STIP refers to short term income protection there is much confusion about what this actually means. Ask different advisers or brokers from different sectors of the market and even they have a different view.
Are we talking purely about long-term IP plans with a limited payment period - or are we including the myriad of PPI-esque ASU and MPPI plans as well? If not, why not - and if so how do we explain the difference in a meaningful way without just lumping everything in together?
It is only the start of the process of course and debate around these issues should be encouraged. The issue of publishing claims statistics has been a somewhat controversial one in the protection industry for many years since intermediary firm LifeSearch began campaigning for the publication of critical illness statistics a decade ago.
Other intermediaries including Drewberry Insurance, Roxburgh, Best Insurance and more are carrying the IP flag as loudly as they can and each business uses claim statistics to help get the message across. It is also interesting that while overall sales of IP are falling, income protection sales from these firms are rising.
Concerns over a lack of consistency in the way providers report the figures remains a concern however, especially for short term covers. Does it make sense for the industry to publish more and more data - or keep it simple and stick to the basics?
The ABI face an interesting challenge in defining what exactly is a short-term IP plan. There are grey areas around the definition of the products and while for many short-term IP refers to a proper IP plan with a limited payment period, for others it is accident and sickness cover.
