Income protection Code needs updating for consumer clarity
The Association of British Insurers (ABI) is planning to consult on the current Code of Practice for income protection (IP) products in the next month.
The move follows updates of the Codes for both critical illness and long term care insurance over the past year.
The ABI's head of health, Richard Walsh, said the IP Code is also in need of an update and the consultation will focus on improving consumer clarity.
'We thought it was time we did some work to bring the Income protection statement up to date, with more consumer clarity in areas are covered at the moment, such as 'any' and 'own' occupation, for example. We are going to produce a model consumer guide ' which we do not have at the moment ' to guide consumers through, telling them what kind of cover they should be looking for,' he said.
Walsh added there is also a problem with the various names currently in circulation to describe IP cover.
'Some people still call it permanent health insurance, which is exactly the same thing, so we will be consulting on this aspect too and taking comments from people in the industry,' he said.
Eugene McCormack, director of marketing at Unum- Provident, agreed more clarity was needed in the IP market.
'Income protection has been known as permanent health insurance in the market for so many years even insurers tend to use different terms to describe cover. If we cannot decide on a term, what chance does the consumer have of understanding products?' he said.
Bob Cheesewright, technical manager at Swiss Life (UK) and member of the ABI's IP Working Party, said the guidelines proposed in the consultation paper should be received well by the market.
'It will ensure consumers are better equipped to make a rational purchase. I am sure advisers, consumers and providers will welcome the changes,' he added.
