Scottish Provident is considering adding a guidance note to its application form in the hope it will increase the accuracy of height and weight information supplied by applicants. Will we see more providers follow in Scottish Provident's footsteps and could some of them even take it a step further?
Market views
Sue Wilkinson, Scottish Provident
Since Scottish Provident took the initiative to change the emphasis on the way it asked questions on height and weight, there has been a misconception that we are tightening up our underwriting.
This is not so. The underwriting stance towards people who are overweight has not tightened or changed in any way. This is simply a move to minimise non-disclosure, which is primarily for the good of the client, as it is an honest attempt to reduce the number of policies made void at claim time.
As non-disclosure is a lose-lose situation for everyone - just think of the impact of some of the recent media stories - any move towards closing the disclosure gap benefits everyone: the client, the financial adviser, the individual insurer and the industry as a whole.
Obesity is a big issue in the UK, and awareness of this issue will continue to grow. As people who are overweight are at greater risk of cancer, diabetes and heart problems, to name but a few, it is of the utmost importance that they get the cover they apply for as they are potentially more likely to claim.
Making sure that accurate height and weight readings are recorded at application stage is critical.
The positive news about obesity aware-ness rising is that people will start to do something serious about it.
Linda Tyson, LifeSearch
While we are not in favour of applications being made longer for the sake of it, we can see the benefit of such guidance. The error ratio for height and weight on application forms is a problem and if this encourages consumers to record their measurements more accurately it can only be a good thing.
We need to ask ourselves what an acceptable error ratio is. A stone either way is a lot to someone of say 11 stone, but to someone around the 20-stone mark, the difference could be irrelevant. Last week an applicant over-estimated his weight by three stones as modern home scales on average have a capacity around the 20-stone mark, so when he stepped on it said, "error".
We may see many more life offices following Scottish Provident - although we must be careful not to make the application process longer or more complicated by taking it too far, and for life offices to use this information to cherry-pick further and underwrite those who don't quite fit the box more harshly.
Consumers need to take responsibility for disclosing material facts in the application process, just as we need to make this process as transparent as we can. The use of declined claims statistics in a format suitable for consumers would be a good start but we must continue to consider how to reduce the level of claims declined for non-disclosure.
Matt Rann, Aegon UK
It was interesting to see Scottish Provident's reaction on the TV programme Watchdog in a dispute concerning a client's apparent rapid weight gain shortly after the proposal form was signed.
While the efforts of Scottish Provident should be viewed positively, I wonder whether the protection it gives provides a total solution. In addition, once this information is gathered, it should trigger an action. For instance, if a prospective client says they have not been weighed for six months, does Scottish Provident insist on an up-to-date reading? This additional requirement may lead to the underwriting process becoming more slow. The smoothest option may to wrap this up in a tele-underwriting interview during which the client weighs themselves.
The issue of non-disclosure is complex. The causative effects are many and need to be addressed on many levels. Education has a big role to play at both intermediary and client level. Literature must be clear and concise with guidance as well as relevant warnings provided at the start, during and at the end of the pre-risk process. The Association of British Insurers' recent guidance on proposal form clarity is significant.
Only time will tell, but insurers need to examine and lab test - and low levels of sum assured can only be a retrograde step.
Mike Owen, Special Risks Bureau
I have a fair degree of sympathy with Scottish Provident over its reported stance on inaccurate height and weight submissions. I have to declare an interest as Scottish Provident is one of the providers supporting the Special Risks Bureau (SRB) initiative.
In my role at SRB, I have seen numerous examples of non-disclosure - some in respect of the height and weight issue and others relating to general medical conditions. Most of these cases are innocent in nature and not a deliberate withholding of information. Most of us have a fairly sketchy grasp of our medical history, or the significance of symptoms.
There is also an element of being in denial about our bodies and mortality, when the mirror and scales tell a very different story.
Any move to improve the quality of client information to assess a risk is to be applauded if it avoids disputes when a claim is made; these are painful for the dependants and, in the event of a critical illness claim, the assured.
The issue of disclosure is highly significant, given the industry's move towards straight-through processing and the development of tele-underwriting in the UK.
Both initiatives rely on accurate and honest disclosure by the client, reducing the requirement for GPRs (GP reports) and other medical evidence in more cases.
The aim is to achieve cost reductions and faster turnaround times. It remains to be seen whether this will lead to fewer or more claim disputes in the long run.
