A call for full regulation and the introduction of CAT standards (cover, access and terms) of long t...
A call for full regulation and the introduction of CAT standards (cover, access and terms) of long term care insurance has been made by the Treasury following the launch of a consultation document outlining four possible options for introducing the long-awaited measures.
The Treasury has made it clear that its preferred option is for full regulation of advice as well as information on long term care insurance plans. But the paper also considers a voluntary code of practice and CAT standards without statutory regulation; partial regulation with FSA authorisation of plan providers; a standardised disclosure regime covering the information provided to potential purchasers; and full regulation of information and advice on all health insurance plans including critical illness and income protection.
Melanie Johnson, economic secretary to the Treasury, said: "The consultation considers in detail the appropriate cover, access and terms the CAT minimum standards should provide. Buyers will know exactly what changes in their circumstances will trigger benefits and ensure sympathetic, professional assessment of their needs.
"This will avoid wrangling over whether the criteria has been met or not, avoiding unnecessary delay in treatment, nursing or care. CAT standards will also state how quickly a claim should be processed and how benefits will be paid."
However, there is concern the introduction of CAT standards could encourage more customers to buy cover without seeking independent advice first. Derek Williams, director of Hampshire-based IFA, Direct Financial Services, said: "Although I would welcome regulation, I do not back CAT standards at all. Long term care insurance is a complex area and if customers are made to think that products are simple, they may be encouraged to purchase cover by themselves without the help of an adviser.
"In my opinion, the proposals are treading on very dangerous ground," he added.
However, LTC insurers welcomed the move. BUPA's managing director Geoff Brown said that any action taken to give customers extra help when purchasing cover had to be a step in the right direction. He said: "We are totally behind the proposition for both regulation and CAT standards if they can be developed to give comfort to the buying public. The average age of our customers taking out long term care insurance is 67 - a vulnerable age. Whatever can be done to give more peace of mind has to be good."
PPP Lifetime Care has also backed the proposals, but believes that a public information campaign is also needed to boost consumer awareness about the issues involved in purchasing cover.
Jacque Langford, head of retired market development at PPP lifetime care, said: "There is a strong argument for a public information campaign to encourage people over 50 to consider some form of financial protection against care costs. Insurance providers, financial advisers and charities all have a role to play in informing the public but so does the Government and local authorities."
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