Paul Robertson looks at the advances in screening and detection for some critical illnesses such as cancer, and discovers how this may affect cover in the future
Advances in the detection and screening of diseases have been the dominant issues in critical illness (CI) market over the last few months.
As reported in last month's Cover, following news of the Government's intention to introduce population-based prostate cancer screenings across the UK, the Association of British Insurers (ABI) Critical Illness Working Party has proposed a draft rewording of the cancer definition. The working party has proposed the changes to avoid premium increases, which could make CI unaffordable for many men.
The screening will mean many more incidents of prostate cancer will be diagnosed. But early detection will mean these cases are relatively mild and easier to treat successfully than more advanced cases. So the new definition, open to further consultation, means that the more aggressive or more advanced cancers would be covered, but not the less serious cases. It is proposed that unless the prostate cancer has a Gleeson score more than six, or a TNM classification of at least T2, it will not be covered.
But it is likely that consumers will have a choice between a new wording, focusing cover on a critical diagnosis and keeping premiums lower, or something closer to existing wordings with a higher cost.
Commenting on the issue, Nick Kirwan, chairman of the ABI Critical Illness Working Party, says: 'Our respondents overwhelmingly felt that CI cover should mean what it says. This type of insurance is designed to cover people with very serious conditions that are often life threatening and certainly life changing. Advances in testing mean that insurers now have the scope to provide a broader range of policies, giving consumers greater choice when it comes to the level and cost of the cover they buy.'
The prostate issue is the most pressing of a slew of disease detection issues in the pipeline. Doctors have developed a new test for damage caused by heart attacks, involving the measuring of troponin levels. Traditional diagnosis methods measure cardiac enzymes, but the new test is much more sensitive, picking up lower levels of cardiac damage.
Commenting on the consequences of this test becoming standard, Simon Pepper, product manager at Friends Provident, says: 'Whereas before you may not have had any symptoms, or just a little chest pain, passed off as angina, it will now be realised if you may actually have had a small heart attack. Although the client may go on in a few years to develop serious heart disease we would be paying out earlier on the small events, as opposed to the large events that are the purpose of the insurance.'
At present the heart attack definition is standardised, by both the industry and the British Medical Association, as involving the death of a portion of the heart, electrocardiograph changes, pain, and elevation of cardiac enzymes.
But there is concern this consensus may crumble in the light of the new test. The World Health Organisation has a working party looking at the issue at present and there have been recent discussions in the British Medical Journal. The troponin test is accurate, quick and cheap and if it becomes standard in the NHS, and the cardiac enzyme test is dropped, there would be a mismatch of definition, with an obvious need for redefinition by insurers.
Another less pressing medical issue that may crop up in future is melanoma. As Pepper explains: 'Melanoma has always been a concern in the sense that it is not really a critical illness. If you pick it up early enough and have it cut out you have a claim, but you have no real disability or after effects. It is at the low end of the spectrum and may be linked to the providers tendency to keep adding new diseases to be covered as a marketing tool.' Nobody has, as yet, proposed a redefinition of melanomas within critical illness, but few providers would be surprised if it cropped up in the future.
Tiered benefits
This time last year a feature that some providers were looking to develop was tiered benefits. A CI policy with tiered benefits would pay out a lump sum that varied according to both the severity of the illness and the illness itself. These features have failed to materialise. As BUPA, one of the providers looking at this last year noted at the time, the problem is that consumers like to keep CI cover simple. Brian Lentz, an IFA with Portfolio Insurance Consultancy agrees, saying: ' I do not agree with structuring policies so they pay out different percentages according to the severity of the condition, as it makes the contract expensive and creates hurdles over claims. You would no longer be saying, 'Is this a valid claim or not', you would now be saying, 'Is this a valid claim and to what extent is it valid''. Lentz added that tiering would defeat the object of CI in clients' minds as cover is purchased on the premise that it is simple.
Although the CI market is still highly buoyant, the latest survey from Swiss Re's Healthwatch report revealed new policy sales fell by 0.4% in 2000 to 780,271. This downturn is due to a collapse in mortgage-related endowment sales within the market. Sales in this sector have decreased by 55.7 %, reflecting the withdrawal of a number of endowment products from the market. The slack was taken up by large increases in the remaining sectors. New mortgage-related term sales increased by 18.9%, while non-mortgage-related sales increased by 47.7% and now make up 47% of the total market, compared with 31.7% in 1999. Free standing sales of CI increased by 33% in 2000. Overall the critical illness market has more than doubled in the last five years, from 302,245 new policies in 1995.
The percentage sales by IFAs in 2000 increased by 7% to give a 37.1% share of the market. This compares with 31.8% in 1998 and 34.5% in 1999. Kirwan explains this increase, saying: 'As IFAs have seen other income streams come under pressure, such as the advent of stakeholder pensions, they have recognised protection as a good source of income. IFAs that previously specialised in pensions and investment are now looking at critical illness and other protection.' The average sum assured for a new individual critical illness policy in 2000 was £65,789. This figure, which includes free standing and accelerating benefits, is a 17.8% increase from 1999.
