CI: More personal questions are not the answer to non-disclosure problems
The protection industry should not ask customers about their waist size, despite the fact that customers' weight could have a significant impact on their premiums, speakers from Standard Life told delegates attending the COVER Forum.
Mick James, protection marketing manager at Standard Life, said even though most people put down their aspirational weight rather than their actual weight when applying for cover, they should not be asked to supply providers with their waist measurements.
"We are already asking a lot of questions regarding weight, so I do not really think we need to add another question about waist measurement. I certainly would not like to do so," James said.
Talking about the issues surrounding rejected claims and non-disclosure, James admitted that being overweight could have massive health implications which, in effect, could increase the risk of policyholders claiming.
"Obesity could shorten someone's life by up to nine years and the heavier you are the more likely you are to die. There is also no guarantee that weight loss would improve mortality," said James.
Standard Life recently revealed its latest declined claims statistics for critical illness (CI) insurance. The figures showed that 34% of the rejected claims were turned down due to non-disclosure.
James believes genetic testing could be a solution to this problem. "Genetic testing would put the choice back in the hands of the consumers," he said.
However, it may be some time until this method of measuring someone's risk is used by the insurance industry, if it happens at all.
In the meantime, James suggested precautions life offices should take to decrease the amount of non-disclosure.
For example, in CI, claims managers should make sure consumers only submit a claim for covered conditions and that they read the definitions and understand what they are covered for. Managers should also make sure claims are made as quickly as possible, as that will make it easier to get appropriate medical evidence. All requirements should also be sent together to avoid unnecessary delays.
When it comes to claims for life insurance, claims managers need to ensure that an original registrar's death certificate is sent immediately, must be aware of the policy conditions, and send all requirements together in order to avoid delays.
"The industry needs to do something about the number of declined CI claims as it is destroying consumer confidence in the protection sector," James concluded.
