Survey highlights lack of understanding around proposed definition changes
More than four out of five intermediaries are not aware of next year's changes to critical illness (CI) definitions, despite extensive media coverage.
In research carried out by the Exchange on behalf of Royal Liver, it was revealed that 81% of IFAs are oblivious to the Association of British Insurers' (ABI) updated CI statement, which has to be adopted by April 2007.
Another 87.5% of the 500 respondents also admitted they do not even understand the proposed amendments, including the addition of future-proofing.
Industry experts believe the lack of alignment between insurers and advisers is partly to blame for the confusion.
Commenting on the findings, Peter Chadborn, principal of IFA firm CBK, said: "I am not surprised that most IFAs don't know that the ABI has changed this rule. Even though there has been plenty of media coverage, it hasn't been enough. I think the problem is that life offices and advisers don't have enough understanding about each other. But this is more of an observation than criticism."
Chadborn added: "Something has to be changed. Nine in 10 advisers do not know anything about the new definitions – the industry needs to understand why that is."
Agreeing with Chadborn, Mark Davies, technical manager at Royal Liver, said: "This research showed that there is a need to raise awareness of the forthcoming changes. This should be done by the ABI, as well as product providers and leading financial publications. This would ensure that financial advisers have the support they need to offer the best information and advice to their clients, as well as helping IFAs to treat customers fairly."
ABI spokesman Jonathan French said: "The new statement is designed to make CI insurance clearer to consumers, which is as important to advisers as it is to providers. The Association of IFAs (AIFA) played a full part in the consultation process, as did several individual adviser firms.
"The widespread media coverage that this initiative received, together with the information in the statement itself, means that financial advisers should be well informed about this issue. If advisers are in any doubt about the practical implications of the new statement, they should contact either AIFA or the ABI."
The study also found that only 11.5% thought the changes would improve CI cover.
To read an overview of the main changes click on the yellow link below http://www.abi.org.uk/Members/circulars/viewAttachment.asp?EID=13545&DID=12916
