Alea Risk's Andrew Wibberley enters the debate around declined critical illness claims which do not 'meet the definition' and calls for a wording re-design.
Kevin rightly says that public opinion matters - whether in music or in insurance - and we need to react to it.
His key proposal is that: "If it sounds really bad we should pay. That doesn't necessarily mean the full amount - but something is better than nothing".
In the 20 years since Oasis last released a decent song, the amount of Critical Illness and Income Protection claims that are declined have reduced by over 50% from around 2 in 10 to less than 1 in 10.
On a like for like basis this means around 2,000 more claims are being paid each year - 2,000 more families and businesses getting a payment when they most need it.
Claims are only turned down for misrepresentation of a material fact when applying or not meeting the definition of the policy when claiming.
Any decision to decline a claim is made by experts with knowledge of medical conditions, policy terms and the impact that their decision may have on the customer and the industry.
Public opinion is everything. We need to understand it, adapt to it and where possible influence it. If we are serious about providing more protection for more families and businesses we must be and be seen to be fair and supporting people when they need it the most.
The issue with any decent sounding proposal like Kevin's is the detail of what "sounds really bad" to one person may not to another.
How many of these situations "sound really bad" to you?
- severe arthritis requiring walking stick and inability to lift young child
- long term depression that has caused the individual to give up their job
- heart valve surgery with estimated 4 week recovery period
Does "sounding really bad" to you require knowledge of the personal circumstances of the claimant?
Would your views change if they occurred to a single parent or someone with no children, to a struggling musician or to Noel Gallagher, or to someone with no social media presence or one who had 50,000 twitter followers including many journalists?
Treating Customers Fairly has to apply to all customers, not just those who are making claims. This demands consistency and not making "commercial" or subjective decisions for the sake of short term PR.
Objectivity is critical if we are to prove fairness.
In short, introducing anything along the lines of "sounding really bad" as a claims criteria officially or unofficially would lead to:
- higher premiums for all customers
- more opinions and less consistency in the claims process
- more declined claims, as more claims are made
- more negative stories in the press as a consequence of the above
We need products that are easy to buy, easy to explain and easy to claim on.
I like the idea mooted by CIExpert's Alan Lakey and others to focus on types rather than names of condition.
I would want to see an "including, but not limited to..." wording to allow people to see the names of some conditions that they may be particularly worried about.
"Neurological conditions" does not carry the same public awareness (and fear factor) that Parkinsons, Alzheimers and dementia do.
A second trigger explicitly related to the impact of a condition in the wording would help move the focus to what the insurance is really for - the financial loss caused by the event.
A policy could offer rapid but lower initial payouts with significant increases if the impact on that individual's life does turn out to continue over the longer term.
This leads to simpler definitions as the need to perfectly describe what a heart attack will look like in 2036 reduces in importance.
Instead we can concentrate on the impact to define how critical the illness turned out to be as the major payment factor.
Seven Families shows what can be achieved by putting claims front and centre of our proposition.
We must maintain the objectivity in that process and improve the chances of customers knowing and valuing what they are buying.
If we can achieve this we will protect more people and be the subject of less negative stories.
Andrew Wibberley is director of Alea Risk