By Rachel Williams The ABI has devised a set of best practice guidelines to help simplify critical i...
By Rachel Williams
The ABI has devised a set of best practice guidelines to help simplify critical illness policies for both IFAs and consumers.
The ABI statement of best practice comes in response to the Office of Fair Trading's report on health insurance last year which called for less product complexity in
the market.
The guidelines, based on the views of IFAs, providers and organisations such as the PIA Ombudsman, were prepared by the ABI's working party on critical illness. Among the recommendations is a suggestion that what is and what is not covered by CI policies should be made available to consumers as early in the sales process as possible. The aim is to help customers make better comparisons of policy key features.
Nick Kirwan, chairman of the ABI working party, said this will involve providers using a consistent, standard method of layout
in product literature. He added: 'Providers genuinely try to be clear, but while they do this differently customers cannot compare policies. If the customer cannot compare products, the normal market forces which make for a competitive market break down.
The guidelines state that generic terms should be used across policies to minimise the potential for confusion on definitions including the assessment period, core conditions and the deferred period. For example, the term 'deferred period' can be used to define the period before the waiver, the survival period, or the length of time taken to assess a permanent total disability (PTD) claim.
This move aims to ensure all providers are using the same terms when describing product features. Special emphasis has been placed on PTD where a high number of claims are turned down.
The terms 'irreversible' and 'permanent' have been made generic to ensure that descriptions of PTD are understood. The working party hopes that these moves to increase clarity for IFAs and customers will reduce the number of unpayable claims.
'Most debatable PTD claims surround what is permanent and what is not. Every unpaid claim is bad news since it means customer expectation has not been satisfied,' said Kirwan.
The document also pointed out that model wordings for certain conditions covered should be
used. Insurers will be able to offer more cover than that outlined
in the model wording, allowing any additional cover provided to
stand out.
