ABI: Body finally gets green light from the Office of Fair Trading to review TPD
By Lucy Quinton
The Association of British Insurers (ABI) Protection Committee is set to review the total permanent disability (TPD) definition after receiving the Office of Fair Trading's (OFT) approval.
Without the OFT's go-ahead, the ABI would not be able to implement the changes, owing to competition law preventing the sharing of providers' company details, explained Nick Kirwan, head of health and protection at the ABI.
TPD claims make up a small percentage of claims overall, but this does need to be looked at and is the next thing on the ABI's agenda following on from the bigger definition changes that the ABI has embarked on this year, Jonathan French, spokesperson at the ABI, added.
Kirwan said the next stage would be to outline the plan of action, go over back cases and look at categorising underlying causes and plan to come up with replacement definitions for TPD. He added that the ABI would also be consulting with actuaries on this issue.
He anticipated that this process would take awhile and probably not come into effect until the middle to end of 2008.
Back in March, when it was revealed that TPD was something the ABI was looking into, French said it was examining ways of making the clause easier for customers to understand.
He expects a change and an amendment to the existing Statement of Best Practice.
Andy Milburn, IFA market manager at Royal Liver, said this venture had been in the offing for awhile. "We are glad this has been taken off the shelf and is being dealt with. The danger is that reviewing one definition and replacing it with a number of definitions may add to the complications," he said. However, he acknowledged that it was a good idea to clarify it and the next stage would be to see who was involved in the review stage.
Milburn urged the ABI to "get network panels, researchers, advisers and consumer groups involved with this", adding that it would be a good idea to gather the industry together to discuss the proposals, to make sure they are understood and how best to get the message across to people.
Roger Edwards, products director at Bright Grey, was also pleased that the OFT had given the go-ahead on behalf of the industry as individual market forces on their own are not solving problems.
One alternative, he said, could be to dump TPD and add more specific definitions for critical illness, which would not be subjective and consumers would know exactly what they were covered for.
He added that he thought the next stage would be to set an agreed timescale about when the review would happen, which he hoped would be quickly.
John Joseph, managing director of John Joseph Financial Services, was also pleased that the ABI will now be able to look closer at TPD, but added that it was "sad" that the ABI had to go through the rigmarole of waiting for approval.
