CI: Reinsurer calls for 'scoring system' to indicate impact of heart attack and stroke
The Association of British Insurers (ABI) should use severity measurements to decide whether someone has a critical illness, according to Gen Re.
Speaking at Gen Re's ABI definitions workshop, Paul Brett, regional chief actuary for the reinsurer, told delegates that current claims criteria for major critical illnesses such as heart attack, stroke and cancer are too loosely defined to be able to differentiate between someone who is really unwell and someone with minor problems. This has led to inflated critical illness (CI) premiums, leaving the majority of people unable to afford the cover.
To solve the problem, Gen Re suggested the ABI should introduce news ways of measuring the severity of an illness, similar to Activities of Daily Living (ADLs), to define what impact a condition has had on a policyholder's life. "We have to do something so that in five or 10 years' time we will not be covering lots of silent strokes and minor heart attacks. We have to find new measures to decide whether an illness is critical because that could reduce the price of the current product," Brett said.
Gen Re proposed a severity ranking, measuring a patient's ability to lead a normal life on a scale of one to 10, should be introduced for stroke, and that people suffering heart attacks should have their hearts measured to find out how severe the attack was.
Moreover, the reinsurer also suggested that the ABI CI working party's proposal to introduce a tier definition for cancer should include other illnesses.
"Maybe we should be looking at tiering some of the other definitions, such as heart attack and stroke. There are people that would prefer a cheaper CI product because they can afford it. Some cover is better than no cover," Brett said.
Gen Re's proposals, however, were strongly criticised by Richard Walsh, head of health at the ABI, who also attended the meeting. "Policies measured on the basis of ADLs have had many disputable claims in the past and it is already very confusing for consumers," he said.
"When it comes to tiered products, we decided to propose this concept for cancer since it is the most difficult disease to future-proof. Heart attack and stroke do not really fit into this rationale, and to tier these conditions would be a radical step."
