The Total and Permanent Disability (TPD) definition for critical illness could be scrapped as the Association of British Insurers (ABI) seeks to shrink the number of claims rejected.
The Association says it has got clearance from the Office of Fair Trading (OFT) for it to set minimum standards for the TPD definition.
It confirms this could lead to the end of the TPD clause, which would be replaced by a string of clearly defined conditions that currently fall under the TPD umbrella.
The ABI says it is beginning to contact member firms for their views on the plans, as well as to find out how many claims they receive, what they are for, and how many are rejected.
It follows industry-wide concerns consumers are unsure what they can and can not claim for under TPD after taking out critical illness cover.
ABI spokesman Jonathan French says: “This is the next step in our attempts to get the number of declined claims down.
“The numbers of TPD claims form a very small part of all critical illness, but just over half of them are turned down. We want to look at why that is and hopefully improve the situation.
“The problem is that people have been putting in claims under TPD and they have then found the condition they have is not covered by the clause.
“Ultimately we would hope to define all the conditions that together fall into the TPD category. It may be the case that in the future there will be no need for the TPD definition.
“The benefits for IFAs are that they will be able to explain to their customers exactly what TPD encompasses. It may mean there’s no such thing as TPD, but just more illnesses defined.”
French says the ABI’s work will hopefully lead to an addition to the ABI Statement of Best Practice for CI Insurance, but adds “this is not a quick piece of work”.
Mark Davies, technical manager at Progress from Royal Liver, welcomes the move but adds consultation must be thorough.
“Our view is that we welcome attempts to make this definition easier for consumers to understand,” he says.
“As many different people - reinsurers, insurers, IFAs, consumer groups etc - should be involved in any consultation.
“It is also important that, once produced, it is communicated as effectively as possible.”
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