Medical advances may mark the end of guaranteed rate critical illness plans
Now may be an excellent time to buy a guaranteed rate critical illness (CI) product, if concerns in the industry are realised according to Scottish Equitable.
Matt Rann, head of underwriting and claims at the life office, said the pace of medical change was making it increasingly difficult for insurers to accurately price guaranteed products.
He said: 'Medicine is changing so rapidly that insurers are becoming wary of guaranteeing rates going forward as it is difficult to make assumptions based on the next 25 years. I think now is the time to buy guaranteed rate CI cover.'
The proposed screening of prostate cancer is one area causing concern, but other less publicised medical advances are also being closely monitored by the industry.
For example, heart attacks can now be diagnosed by measuring troponin levels, a protein released by the heart when part of the heart muscle dies. This is believed to be much more effective than traditional diagnostic procedures which are currently used by insurers when assessing CI claims. As the test is more sensitive, more heart attacks are likely to be diagnosed.
Rann said: 'If a policyholder had chest pain, raised cardiac enzymes but no ECG change, the insurer may not pay out.'
However, the World Health Organisation (WHO) is considering changing its definition of heart attack to one based on levels of troponin in the blood.
Rann added: 'The CI definition is the same as the current WHO interpretation. But, if WHO changes its definition and doctors start to use it, there could be problems. The perception of CI by IFAs and the public could be damaged if claims aren't paid. However, if insurers move to a troponin-based definition there would be a lot more claims.'
But Ross Ainslie, head of product research at General Cologne Re said it would be impossible to second guess how the market will react to possible developments. He said: 'The messages on prostate screening and troponin testing are mixed. Some in the industry are pessimistic while others do not think it will have a big impact on claims.'
