The announcement on CAT standards for long term care insurance (LTCI) is good news for both the cons...
The announcement on CAT standards for long term care insurance (LTCI) is good news for both the consumer and the industry and is certainly a step in the right direction.
The setting of CAT standards will provide the consumer with greater confidence and an improved level of protection. However, in order for the standards to be effective consumers need to understand what they mean and their purpose. CAT standards are not a substitute for advice and although consumers will be better informed, it is likely that they will still find the subject complex.
It is important to realise that the proposed CAT standards set minimum requirements, which can be useful for comparison purposes. Providers do not have to offer a CAT standard product and are free to offer products which exceed the standards. This clearly shows that IFAs and organisations such as IFACare will continue to play an important role in ensuring that consumers select the most appropriate product to meet their needs.
Furthermore, the announcement shows a clear acceptance by the Government that LTC provision needs the participation of the insurance industry and would not be effective without it. This is confirmation that there is an onus on the public to make their own provision.
When talking about CAT standards, perhaps the term itself should first be standardised. The 'C' stands for 'charges' for investment products and for 'cover' for protection products which could cause some confusion to the consumer.
The Raising Standards quality mark scheme (formerly SALTR) will also cover LTCI products and it is vital that consistency remains between its work and the CAT standards.
A great deal of thought has gone into producing the new CAT standards so that they do not just cover the product features. They place considerable emphasis on the required service levels and this is clearly intended to reflect the aspects of the policy that are of importance to the consumer.
There are still some aspects of the standards that may need clarification but this should just be tweaking to ensure that everyone understands what is meant. For example, the CAT standards place a requirement on providers to inform consumers if there are "significant changes in State benefits", but what does 'significant' mean? Further clarification at this early stage will avoid any confusion later on.
The 'access' section of the CAT standard, which informs consumers on how to obtain LTCI, may also need further enhancement, for example, an explanation such as: "Do I need a medical examination to take out the policy?" One omission from the consultation document is a timetable for implementation.
It is clear the Government expects people to continue to fund a large part of their own care needs. CAT standards will help to build consumer confidence and raise awareness of the need to make proper provision and it is important that they are implemented as soon as possible.
