Provider takes basic product route in response to declined claims statistics
Scottish Widows has launched a back-to-basics critical illness (CI) product, which sees the provider entering the guaranteed CI market for the first time.
The CI cover, available to intermediaries from the end of August, offers level or decreasing cover, with up to £25,000 child CI cover. It also offers an optional premium waiver benefit.
Moreover, it provides a number of guaranteed insurability options including marriage, moving house, birth of a child and legal adoption.
The guaranteed CI policy, which currently covers 28 different conditions, is completely different from the provider's reviewable CI product, which has not changed at all, according to Nick Kirwan, marketing director for protection at Scottish Widows. The two CI offerings have also been insured by different reinsurers, he added.
Commenting on the launch, Kirwan said: "We wanted to design a product that was easy and simple to understand rather than launching something with lots of bells and whistles. This decision was taken after recently published claims statistics revealed that around half of all declined claims are rejected due to the fact that customers did not know the extent of their cover. We believe offering a simple product could help reduce this problem, and that is why we opted to create a simple product. This forms a part of our treating customers fairly initiative."
In a separate bid to ensure customers receive fair treatment, Scottish Widows has introduced a claims panel, which will review borderline claims and all declined children's CI claims.
This new claims process, which has been piloted since February, has already seen a number of previously declined decisions or borderline cases converted into accepted claims.
"We want to make sure that we are declining claims for the right reasons. There has been a tidal wave of declined claims hitting the sector. It is therefore important that we as an industry try to combat this," added Kirwan. Scottish Widows has introduced the new process across all its CI products.
Richard Verdin, sales and marketing director at Direct Life and Pensions, applauded Scottish Widows' latest moves.
"Offering a slightly cut down version of critical illness insurance is certainly a step in the right direction. Many insurers have been adding more and more illnesses to their products in the hope that it would make the policies more competitive, but that is not what people want. What they want is a product that will cover them for the most common critical illnesses," he said.
Verdin is also pleased that Scottish Widows has decided to take a more 'human approach' to claims handling.
