The next generation of critical illness (CI) products will have to allow for reviewable definitions ...
The next generation of critical illness (CI) products will have to allow for reviewable definitions of conditions if underwriters are to keep apace with medical advances, according to Swiss Re.
Speaking at a recent roundtable, which debated the future of the CI market, David Howell, head of pricing at Swiss Re Life & Health, said a move to reviewable definitions, in addition to reviewable rates, was the only way to keep future cover appropriate and affordable.
'Insurers will not be able to write long-term guarantees without reinsurers' backing, so we will see a move to reviewable rates. If rates are being reviewed on a short-term basis, then it will also give underwriters scope to make definitions simpler and more consistent with medical advances as they happen. When policyholders have their rates reviewed, the definitions could be reviewed at the same time,' he said.
The prediction follows the move by a growing number of reinsurers to ditch guaranteed rates.
Underwriters are finding it increasingly difficult to keep cover appropriate to medical advances. If guaranteed rates remain, it is believed premiums will see a massive increase.
Howell added if the market does move to reviewable rates, advisers could earn less commission from CI sales.
'Advisers are the strongest critical illness distributors. How-ever, if rates are not guaranteed in the future ' which is looking more and more likely ' they may get less commission selling reviewable policies,' he said.
