The ABI has published its latest update to the critical illness (CI) statement of best practice which it hopes will improve customer understanding of the product.
It includes a new set of standard definition for total and permanent disability (TPD), a change in wording for the terminal illness definition and the standardisation of pre-existing conditions exclusion for children's cover.
The Association will also produce training materials for advisers, an online hub of information and a claims process map for consumers which it believes will make claiming easier and increase successful claims.
The new statement is the result of extensive consultation and research into what customers need and where there have been problems in the past.
Originally it had been suggested that TPD should be renamed altogether, but this has since been rejected after poor industry feedback.
Instead the new definitions will follow the structure of: Total permanent disability - unable [before age x] to do your own occupation ever again.
These may apply to TPD cover such as, own occupation, suited occupation, any occupation, activities of daily work and activities of daily living.
The ABI said it made the change in wording to the terminal illness definition in light of changing medical science and clarity improvements to the Cancer and Parkinson's disease definitions.
Children's CI is in the top five causes of claim for some insurers, most for children diagnosed with leukaemia, and the standardisation of pre-existing conditions exclusion sought to address this.
Nick Kirwan, assistant director of health and protection the ABI, explained the concerns around TPD and the need to remedy these.
"TPD accounts for around 3% of all critical illness claims, yet has a much higher rate of claims declined than other CI claims.
"The new more descriptive headings and standard definitions will make the scope of TPD cover much clearer. The project has attracted a lot of interest from many countries as these are the first standard TPD definitions in the world.
"Children's cover is one of the most common causes of claims under critical illness policies and the work on developing standard definitions for TPD and children's cover will help ensure that critical illness policies are clear and pay out in line with customer expectations," he added.
The new wordings must be implemented by ABI members as soon as practical, but no later than the end of 2012.
