Mike Allison

Personal Touch Financial Services

It appears as though the aims of the consultation paper are to improve clarity not only in the products, but also better manage expectations as to when a claim will be payable. In addition, the ABI claims that as a result it may make the product more sustainable, affordable and potentially offer greater choice in terms of levels of cover.

If we look at why critical illness is not sold at every opportunity, the assumption would be that cost and uncertainty over the potential payout would be two key reasons. Therefore, anything that can be done to help break down these barriers should receive an overall welcome from the industry.

In addition, long-term sustainability of the product from the provider side is vital. There is little doubt that critical illness payouts have supported thousands of people at a time when they have been financially vulnerable.It is the interests of all concerned for product providers to be able to continue offering these products at commercial terms that suit everyone concerned.

Mark Davies

Royal Liver

This change is needed and the proposed changes are useful as they are likely to assist the industry in improving clarity to consumers – and also in continuing to offer the product by moving towards more ‘future-proofed’ definitions.

Without a move to impact- or severity-based definitions, we would see this as a short-term rather than a long-term solution to the challenges in offering affordable critical illness products.

We see the proposals consisting of a standardised prominent warning, the removal of the core/additional distinction, the updating of the illness definitions and the mandatory use of generic terms. These should assist brokers with analysing the different products and explaining the product features and the potential risks more clearly to consumers.

The proposed two definitions of cancer would raise particular challenges to the broker market and in particular to any advice given.

The differences in cover would need to be explained very carefully to consumers.

Paul Cowman

Prudential

The review announced by the ABI is timely as it has been a couple of years since the last review of definitions. The continuing advancement in medical treatment will mean this review will keep industry definitions of conditions covered as fresh as possible.

Hopefully, It will also allow a degree of future-proofing to take account of continuing developments in medical care.

I am concerned about the lack, in many instances, of consumers’ understanding about the type of product they have and exactly what is covered on these policies.

While I do not think this review will make this situation worse, the fact remains that a number of claims are declined because people do not satisfy the definition of a claim, mainly because they are confused about what they are covered for. The industry needs to consider the wider issue of what we can do to educate consumers and advisers.

Susie Colley

West Country Health Care

In line with the requirements of the Financial Services Authority, all intermediaries have a duty of care to their clients – so the clarity that is suggested by this latest document is most welcome.

For quite some time it has been worrying that some providers have referred to ‘core’ and ‘additional’ benefits, so the recommendation that these labels are removed is gratifying.

The addition of generic terms to some of the conditions will also help clarify to the client the depth of the proposed cover. In addition, ‘future-proofed’ definitions can only be regarded as long overdue – they will negate the need for change when a new generation of polices are introduced into the market.

I welcome the clarity and transparency of the consultancy paper and look forward to its acceptance.

Sue Wilkinson

Scottish Provident

With definitions constantly evolving since critical illness insurance appeared 20 years ago, changes to the definition will help to keep protection affordable and, in this sense, it will help financial advisers to sell products to a wider audience.

The trouble is that individual insurers can and do improve on the ABI’s standard definitions to offer wider cover to policyholders. For example, Scottish Provident offers improved ABI definitions for five critical illnesses.

It is the duty of financial advisers to explain the difference between policies in a way which helps people choose the best policy based on its value for money, not cost alone. The changes will not help to distinguish between policies in this way.

We produced a guide last year to show how our definitions have changed since we first launched, allowing for easier comparisons to be made. If all providers did the same, intermediaries would have no difficulty in comparing existing and older products with newer versions.

Perhaps the answer is for the providers themselves to get together and produce a collective guide.