Sometimes a number of factors come together unexpectedly which provide an opportunity to re-think procedures that have been applied for a long period of time.
In March the Social Policy Research Unit in York published a report on the financial implications of the death of a partner.
Some of the key findings were that: one in five women, and one in ten men, bereaved under pension age have dependent children; decline in income following death was greatest among people under pension age, due largely to loss of partner's earnings or their own withdrawal from paid work; and administrative requirements following death require a lot of work and often feature delays, errors and problems in communication.
In October John McFall chairman of the Treasury Select Committee wrote an open letter to the FSA urging them to look into the issue quoting from the SPRU findings and from a particular case where it had taken 11 months to transfer an ISA of £22,000 to a widow. On top of this we have the ongoing issue of whether to write protection business into a trust - and the extent to which the correct advice is given on a routine basis. So now would be a good time for the insurance industry to review its practices.
We also have a narrower but very controversial consultation process that the Crown Prosecution Service is currently undertaking on assisted suicide. Parliament has repeatedly rejected Bills to legalise the ‘right to die' but legal judgements have forced the CPS to make public when they will prosecute and when not. In essence the interim guidance sets out a set of scales: public interest in favour of prosecution, e.g. the victim did not have a terminal illness, a severe and incurable physical disability or a severe degenerative physical condition: public interest factors against prosecution, e.g. the victim did have such a condition and the suspect was the spouse or close relative of the victim. The consultation runs to 16 December.
In the UK, unlike in the USA, virtually all life insurance pays out where the policy holder has a terminal illness. In addition most polices pay for suicide providing the policy has been held for more than two years and there is no non-disclosure but I don't think the insurance industry has ever set out its practices as a general statement. Here is an opportunity to do so. Insurers need to decide their position on claims that will arise when polices have been held for less than two years and where the deceased did not have a terminal illness and to address the other issues.
Now is a good opportunity for insurers to be seen at the leading edge of an upcoming debate about bereavement practices that a wide range of financial services sectors will need to address.
Richard Walsh is managing director of SPPR Consulting
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