Industry: Provider releases details of its declined claims for critical illness
Standard Life has made a daring move by revealing that it refused to pay out on one in five of its 442 critical illness (CI) claims between November 2003 and November 2004. The move has made Standard Life the first insurer in the UK to publicise its declined claims statistics.
The Edinburgh-based provider revealed that 57% of the 88 declined CI claims were turned down because the policy definitions were not met. Some 33% were also refused because of non-disclosure. It also declined 45 death claims on the grounds of non-disclosure.
Standard Life said it took the decision to make its claims figures public in the hope that it would educate both advisers and consumers. "Standard Life has taken the view that something positive is to be gained from it," said Mick James, marketing manager at Standard Life.
Intermediaries are pleased with the move. "It is the first time a provider has issued details of declined claims and I applaud this bold step," said Jason King, managing director of Life Policies Direct.
"There has been considerable nervousness among providers about publishing declined claims data as they are clearly concerned about advertising the fact they decline claims. The first provider to do so could look particularly bad," he added.
Many advisers have urged other providers to follow suit by also revealing their declined claims statistics. However, the Association of British Insurers (ABI) has revealed that it has no plans to enforce its members to follow Standard Life's lead.
"While we are perfectly happy for member companies to publish claims information of this kind, we do not intend to ask them to do so," commented ABI spokesman, Jonathan French.
He added: "Our member companies are expected to explain carefully and fully to their customers what the conditions of any given policy are and about the importance of disclosing pre-existing medical conditions when applying for these policies.
"How they choose to do this is a company decision. Compiling industry-wide data on declination of claims would not provide any meaningful basis on which customers could compare different companies."
Disputing this, King said: "The frequently used argument from providers that data can be skewed due to frivolous claims from policyholders does not stack up as all providers will be subject to the same problem to a similar degree."
