Universal Provident has announced it is to offer vegetarians a 5% discount on life and critical illne...
Announcing the decision, Jon Pardoe, managing director at Universal Provident said: "It is clear that successive governments and the Ministry of Agriculture in particular, have conspired to play down the threat of CJD. As an insurance provider, we believe that clients should be kept informed and where there is a genuine reduction in underwriting risk, it should be passed on to them - not used to subsidise their premiums."
The insurer is offering the discount to individuals who have not eaten meat since 1988. While Pardoe acknowledges it could not be proved whether the applicant is vegetarian, he did not believe the discount was sufficient to encourage fraud.
According to figures from the Department of Health, there have been 85 definite or probable cases of variant CJD in the UK and of those 85, 80 have died from the disease. So far this year, 18 individuals have died.
There are concerns that the disease could reach epidemic proportions. Pardoe said: "Predictions for death by CJD have risen to tens of thousands with experts stating there could be significantly more cases than this."
It has been proved the disease can have a long incubation period sparking concern that huge numbers could be developing the condition without knowing it.
According to computer predictions by Government advisers 6,000 people may have been infected between 1980 and 1996. But if the incubation period runs as long as 60 years this could increase to 130,000.
These concerns are supported by claims of an increasing number of medical professionals taking out critical illness cover due to CJD fears.
Penny O'nions, principal at medical specialists the Onion Group, said: "We recently had a request for cover from two GP partners running a practice. They wanted to take out critical illness insurance on each other to protect their practice. They were both big beef eaters and were concerned about the long-term future of their business."
She added: "Over the last nine months we have seen a considerable rise in the number of medical professionals taking out critical illness and PMI because they were worried about CJD among a range of food-related medical problems."
The insurance industry is taking this news in its stride. Ross Ainslie, product actuary at GeneralCologne Re, said that while the disease is being monitored, providers are not rushing to re-price their products. He said: "No-one in the industry is making allowances for CJD in their pricing. While they are aware of the issue the market is so competitive they cannot raise premiums."
Roger Edwards, product marketing manager at Scottish Provident, said that insurers should learn from the AIDS/HIV experience and react with caution.
He said: "We must be very careful that the industry does not get itself into a rate panic as it did with HIV and AIDS. Many deaths were predicted and term rates practically doubled overnight. The industry needs to be aware of the implications of CJD but temper their response with a sensible outlook. We do not know how reliable these predictions are."
He added: "80-90% of all claims come from heart attacks and cancer. It would take a massive future incidence to make CJD a significant pricing factor."
Compared with heart attacks, which effects approximately 300,000 people every year, CJD is still a rare disease. But the horrific nature of CJD, and the press coverage it has received, has turned CJD into a new 'dread-disease'. A growing number of individuals want to be sure that this risk, if only a slight one, is covered by their critical illness policy.
A number of insurers, do not include an explicit definition for CJD, but some, including Scottish Equitable and Canada Life, do not believe this is necessary. The disease is covered under other definitions such as permanent total disability (PTD) or, in the case of Scottish Equitable, organic brain disease.
Yet Nick Kirwan, product development manager at SMA Pegasus, said that while the vast majority of critical illness plans should cover CJD, without an explicit definition customers require more clarity. The insurer has so far had one claim for CJD under a life insurance policy.
He said: "We introduced a CJD definition when the disease hit the news and we recieved a number of enquiries. People called in and wanted to know whether or not they were covered."
"It is covered under the terminal illness benefit as long as a cure is not found. It is also covered under PTD as long as the policyholder is accepted for this definition, or Alzheimer's disease under 65. But PTD can take a long time to assess and cuts off at 65, while terminal illness benefit is not available on standalone cover."
Pegasus therefore decided that it was simpler to introduce a specific CJD definition. Kirwan said: "There were so many caveats on the cover it was easier to add a separate definition. As far as we were concerned we were not adding cover - it was a clarity issue."
But Permanent, which added a CJD definition to its critical illness contract in the summer, said that aside from the issue of clarity, the PTD definition was not sufficient to cover the disease.
Rod Macdonald, sales and marketing manager at Permanent, said: "Somebody with CJD may not be totally and permanently disabled until further down the road. This will allow us to pay the claim as soon as the diagnosis is made."
However this is complicated by the problem of CJD diagnosis. A definite diagnosis can not be made until an autopsy has been carried out after the victim has died.
As a result Permanent will pay claims if the consultant is sure that the individual is suffering from CJD. "There is no physical test for CJD, but if there is a balanced probability that it is what the patient is suffering from we will pay them."
