Friends Provident has taken what it calls a "small step" towards rebuilding consumer confidence in critical illness after announcing it will pay a proportion of a claim even if non-disclosure has been identified.
The life and pensions firm says as long as the non-disclosure is not related to the cause of the claim and the insurer would not have turned down the application at the start, it will make an offer based on a proportion of the total claim.
Friends Provident, which says the move is a market first, also reveals its 2006 critical illness claims records, pointing out it paid 483 critical illness claims totalling just under £28m last year.
The move also follows concerns emerging from the Protection Review Conference, held in London yesterday, that non-disclosure remains the “most important issue” in the protection industry today.
Mark Jones, protection and actuarial manager at Friends Provident, says of the firm’s move: “This is one small step to restore consumer confidence in the valuable benefits critical illness cover provides.
“We know this is only a step along the path and not an end to non-disclosure. But it’s a big step in getting consumer confidence back into the whole industry.
“Friends Provident is in the protection business to pay valid claims, to be able to do that we rely on the customer to provide us with all the information we need.
“Where we have found the non-disclosure to be a genuine oversight we will now make an offer based on a proportion of the total claim.”
Yesterday, Nick Kirwan, chairman of the ABI Protection Committee, hinted at the public image problems arising when a firm takes a zero-tolerance approach to non-disclosure.
“We’re not going to get people on our side by turning down someone’s breast cancer claim because they didn’t tell us they had a bad back,” he said.
Friends Provident also today reveals its critical illness statistics for 2006. They include the average critical illness payout in 2006 was over £57,000, with the largest claim standing at £400,000, and says a total of 81.3% (483 from 594) of claims were paid.
In addition, the firm says cancer remains the main cause of a claim, making up 68% of the 2006 total (up 3% from 2005), followed by cardiovascular (down from 2005 at 13%) and multiple sclerosis (6%).
A greater percentage of females made claims relating to cancer in 2006, with males dominating the cardiovascular column.
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