LTC industry remains split over CAT marks

As the Treasury closes its doors to further responses to its consultation on long term care insurance, the industry remains mixed on the suitability of CAT marking long term care insurance (LTCI).

Actuaries at Bacon & Woodrow are urging the Government not to impose CAT standards on long term care products as the Treasury consultation on LTC insurance closes.

Members of the industry had the opportunity to deliver comments on the regulation of long term care to the Treasury before 30 March.

While the firm of actuaries and consultants welcome regulation they fear the introduction of CAT standards could prompt mis-buying.

David Gulland, an associate at Bacon & Woodrow said: "We recognise the political desire to establish CAT standards for a wide range of financial products. However, LTCI is a complex area with an underdeveloped marketplace and we cannot endorse the development of 'minimum benchmark standards' for a product that is still in its infancy. Imposing CAT standards raises the very real danger of consumers mis-buying products. The simple use of cover, access and terms is not sufficient to describe all the aspects of a full LTCI policy and, unlike a CAT investment product, a CAT LTCI product could easily be totally inappropriate."

But PPP lifetime care is adamant that CAT standards could provide the market with the boost it needs, by providing IFAs with a benchmark to measure policies against while improving consumer confidence.

Paul Bennett, marketing manager at PPP lifetime care, said: "We feel that the starting point for the long term care market is consumer confidence and CATs will help this."

Unlike Bacon & Woodrow, PPP also hold that CAT standards will not prompt mis-buying and suggested that the benchmarking would help consumers understand what are very complicated products.

Bennett added: "CAT standards will help consumers understand the cover, it will explain activities of daily living and clarify the benefits they receive."