I greatly appreciated the opportunity to address the All Party Parliamentary Group on the Promoting ...
I greatly appreciated the opportunity to address the All Party Parliamentary Group on the Promoting Protection campaign. I thought we had a constructive discussion, and I wanted to write to you to follow up on a number of the specific points that were made.
The Association of British Insurers (ABI) agrees that advice can be important in ensuring that people buy the right protection insurance product for them and their families. But advice is one of the factors that increases cost, and, therefore, may make products less affordable for some people. The ABI believes that consumers should have the choice to buy protection insurance without advice.
High quality, clear and accurate information about products and the application process involved in buying them is crucial. That is why the ABI has gone to great lengths to improve the clarity of information about, for example, the conditions that are and are not covered by standard critical illness (CI) insurance products.
The ABI will also be publishing a new consumer guide to the CI definitions in due course, which should help consumers and advisers better understand the product.
The ABI also wants to see fewer claims declined, in particular on CI insurance. While, across the industry, 80% of CI claims are paid, the remaining 20% are not. Most claims are declined because, either the policy terms have not been met (in other words, a claim has been made for something that simply was not covered by the policy), or because a pre-existing medical condition was not disclosed.
The ABI's work to improve the clarity of information should help to address the former point, and the latter is being tackled through the guidance it has provided on clarity of application forms it has issued. For example, companies will now ask much more specific questions about health rather than open-ended 'Have you been to the doctor in the last five years?' type ones.
The ABI is currently consulting with the industry and more widely on the next stage of this work, on improving the online and telephone application process.
Finally, I agree that the regulatory regime around protection insurance can be detrimental to consumers. The ABI wants to ensure that there is adequate consumer protection, of course, and one point that came across loud and clear, and with which it agrees, is that it is much easier for people to buy credit than protection (or, indeed, savings) products. Lighter-touch regulation in the insurance field would benefit consumers, the Government and society as a whole.
Nick Starling
Director of general insurance and health, the ABI
