CI: Market's attitude to definitions comes under fire from the founder of CI cover
Britain is the only country having difficulties reaching a consensus when it comes to critical illness (CI) definitions, according to Dr Marius Barnard, the founder of CI cover.
Speaking at Scottish Widows' protection dinner in June, Dr Barnard slammed the UK's protection industry for having "created a problem that doesn't really exist."
Arguing that the sector has over-emphasised the problem, Barnard said: "A person is dead when the doctor says he is dead, and the same goes for diseases.
There is a total obsession with definitions here in the UK, which doesn't exist anywhere else."
Commenting on Dr Barnard's remarks, Nick Kirwan, marketing director for protection at Scottish Widows, and chairman of the ABI CI working party, said: "While we do need to keep the definitions as simple as possible, standard definitions in the UK have become unavoidable because of the regulatory system and the distribution channels that we have in place." Kirwan added that a very strong independent advisory market in the UK, has also forced the case for standardisation.
"In other countries, different distribution mechanisms, such as direct sales forces, which only sell one product, are more common.
Because of this and because of the regulatory structure we have here, advisers have become terrified of being sued and that is why we originally developed the standard definitions," he said.
Kirwan added: "The question is therefore not whether we should have them, but how we best operate them." That said, Dr Barnard thinks that the UK protection industry should start thinking about developing a new CI product instead of tinkering around with the smaller details of the current proposition.
Barnard added that the CI cover of the future should not only be based on the fact that a person has been diagnosed with a critical illness, but also on its severity.
This would mean that a person could receive payouts in certain stages depending on how ill he or she is.
"In 10 years time, all the critical illness products will be based on severity. If this doesn't happen, we are going to run into trouble because diagnosis is getting better and better and many people now have treatment and then walk out instantly," he said.
Dr Barnard does not think it will be difficult to introduce a staging system, but instead believes it will have a positive effect on price.
"Doctors have diagnosed severity for years so there is no reason why we shouldn't adopt this system into our policies. By basing the cover on severity, premiums will also become more affordable," he added.
During the dinner, Kirwan also revealed that all the CI definitions will change except the heart attack definition when the anticipated review comes into effect.
The review, which was initially expected to have been made public in June, is now "currently on track for September," Kirwan added.
