The Association of British Insurers (ABI) has recently published its draft guide to the Disability D...
The Association of British Insurers (ABI) has recently published its draft guide to the Disability Discrimination Act (1995) and is inviting comments from the industry. It follows hot on the heels of the Statements of Best Practice for critical Illness and Income Protection, and as such, is another guide to the minimum standards that a client should expect an insurer to provide.
Insurers have a poor reputation with consumers who often think they are treated harshly at underwriting stage and that their claims will be denied by the small print. Even though the reality is somewhat different, the perception remains. Initiatives such as the ABI guide will increase consumer confidence and lead to more sales of what are very important protection benefits.
However, on reading the draft guide much appears to be simple common sense. There is no doubt that the tone of the guide is customer-focused: "insurers should provide disabled people with as much cover and on the same terms as non-disabled people wherever possible. Insurers should only offer less favourable terms or, as a last resort to decline cover completely, if there is a lawful reason, based on relevant and reliable data." I would hope that most customer-focused protection providers already adopt this attitude.
When underwriting, they do not rely on assumptions, stereotypes or generalisations about disabled people, or about any medical conditions they may have. Underwriting decisions are based, as the guide suggests, on actuarial and statistical data, medical research information, medical evidence, and consultations with medical experts, for example, the chief medical officer. If there are companies who do not work in this way, then the guide will provide a useful checklist to help them bring themselves into line.
What is significant are the implications for critical illness insurance. The approach generally taken by insurers is that if the applicant has already had any of the illnesses covered by the critical illness policy, they will be declined. The guide states that the company should first attempt to offer full cover with an extra premium. If not then cover should be offered subject to an exclusion, rather than an outright decline.
Some conditions covered by critical illness plans are linked. For example, a history of heart attack would mean that other conditions linked to the cardiovascular system, such as stroke and heart surgery, would have to be declined as well. The guide does admit that if there are too many linked conditions, then the remaining cover may not be that valuable. But other conditions may not have medical implications on the remaining illnesses, for example deafness, and therefore a policy with an exclusion for the pre-existing condition would still provide valuable extra cover.
Any initiative that makes companies adopt more customer-focused attitudes, and more importantly increases the confidence of consumers has to be welcomed.
