The Financial Services Authority (FSA) and the Association of British Insurers (ABI) are to blame fo...
The Financial Services Authority (FSA) and the Association of British Insurers (ABI) are to blame for the lack of consumer trust in the critical illness (CI) industry, according to Defaqto.
The independent research firm slammed the ABI in its second annual review of the UK individual CI market, saying delays in agreeing CI definitions had stifled product development and fuelled negative consumer perception of the sector.
It also criticised the FSA for publishing on its consumer website a statement which read: "You will probably not need this cover [CI] if you already have insurance to protect your income."
Nick Telfer, author of the report and head of life and protection at Defaqto, believes this will not help consumers.
He said: "In some circumstances this statement may well be true.
"However, it is more likely to lull unwary consumers into a sense of false security, particularly those with payment protection insurance, which at best pays benefits for two years.
"A statement like this will make them think they are fully protected although they may not be."
Defaqto thinks CI firms must work together if they want the product to remain sustainable - and Telfer believes an industry-sponsored campaign could be the way forward.
He said: "Maybe the ABI or Aifa could do something together, for example, a concerted campaign putting forward the positives about having CI insurance.
"The main message I would like to get across is that there has been a lot of bad press about CI, which the industry needs to tackle."
Defaqto believes the CI market will diversify, with more simplified products such as Virgin's cancer cover being sold via non-advice channels while the specialist advice market will see the launch of a more integrated health management proposition.
Telfer added: "We will see a more holistic product, including not only CI but also income protection and private medical insurance, coming on to the market."
