Scottish Provident's Jennifer Gilchrist wonders why, despite several attempts to improve consumers' understanding of critical illness, nothing much has really changed...
It looks like the race is on again – this time in the form of Association of British Insurers (ABI) plus definitions. Over the last few years there has been rather a lot of tweaking to critical illness products.
New definitions have been added and new severity-based illnesses have been developed. These changes may sound progressive but, in reality, have they actually added any value to the product?
Up until the end of last year, we were in a situation where premiums for critical illness products were reducing.
CI in critical condition: why are sales still sluggish?
So, although the value to consumers, in terms of the new or changed definitions, was minimal, people were actually getting more for their money. However, any changes were built on top of an already complicated product at a time when simplicity seems to be the way forward.
When the ABI first introduced the statement of best practice for critical illness in 1999, it was developed to aid customer understanding and to make comparison across different providers’ products easier.
Back then, a typical critical illness product had around 28 definitions and the first ABI statement contained 20 core and additional definitions, ignoring total permanent disability.
Compare this to where we are today and you may wonder what we have actually achieved.
At the moment, there are 23 ABI definitions, with a typical critical illness product having between 40 and 45 definitions. Has the ABI’s statement lost some of its effectiveness for consumers in today’s market or are we happy for this to almost set a minimum standard for the industry?
With more than two thirds of ABI definitions now having ABI plus definitions in the market, this demonstrates the complexity we are continuing to build on and, in some ways, goes against the original intentions of the statement of best practice.
An example of how complex critical illness cover is for consumers and advisers is the cancer definition. There is currently the ABI standard definition and three others.
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