FOS says CI claims declining but hints at ongoing problems

The Financial Ombudsman Service (FOS) has given an insight into current complaint trends in critical illness, with a mixed report.

Speaking at a Bright Grey and Scottish Provident conference on the future of critical illness, Melissa Colett, an FOS ombudsman, noted that critical illness (CI) complaints are down on last year by 12%.

She added: "Whether that is significant or not is for the industry to decide. Whether the number has declined because there are fewer policies in force is data that I don't have. CI sales are in decline so that may be the reason.

"But to put things in perspective, in terms of absolute numbers, I looked at just over 500 complaints last year. We have to look at that number in the broad scheme of things. There are 2,500,000 people covered by CI, so where does that sit?

"Of those 5,000 only about a third were upheld, so that leaves us around 200 people whose claims were unjustly rejected. Again it is up to the industry to decide if it is happy with 200 people being unjustly treated."

The FOS acknowledged complaints about non disclosure have declined since the introduction of the ABI code. However, Colett pointed out that a few years ago the product was more complained-about than other insurances.

"The Law Commission surveyed the number of complaints versus the number of policies in force across the financial services industry. It found that CI had the highest number of complaints per policy, compared to motor or household for example.

"Now this was a few years ago, so we need to be looking at data to see if that is still the case," she said.

Most protection-related complaints that reached the FOS were for total and permanent disability (TPD), which mainly caused by the high threshold for proof.

Another is illness definitions, especially the dividing line for mild and severe heart attacks and cancers. "Where is the dividing line?" asked Colett.

"However things are better since the ABI came up with its more detailed definitions and headings. Yet it is still hard for the consumer to understand.

"The third reason for complaints is conditions not being covered. We hear of the nonsensical proliferation of conditions but there are complaints from people who get rare diseases and complain they are not covered.

"The wider picture here is why is the consumer not understanding? These complaints to us are just the tip of the iceberg."