Munich Re says make it easier to reinstate insurance plans
Share
Munich Re says providers should make it easier for clients to reinstate insurance policies.
The firm says the requirement for a declaration of health before cover can be reinstated can be overcome by techniques such as tele-underwriting interviews or an online reinstatement facility.
Head of marketing Andy Milburn says the arguments for buying new cover rather than reinstating an old plan do not stack up as critical-illness conditions may not be covered by new plans.
He says: “Clients would also have aged since they bought their original policy and so would have to pay a higher premium for any new replacement with the same cover.
“Providers should also consider the acquisition costs of a new policy against a little flexibility to keep an existing client on their books.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (6)
Lacey Jones | 2 Jul 2010 8:47 am
Sounds good in theory but often its the Reinsurers with their 121 page treaties that stop this type of thing!
Unsuitable or offensive? Report this comment
Anonymous | 2 Jul 2010 10:50 am
Levels of non-disclosure would also have to be monitored which may incur a higher cost, the ability to reinstate as easily as proposed could also mean clients can pick and chose when a policy stops and starts making it anti-selective. With premiums falling to very low levels, would it be cost effective to offer this option when the risk controls may be compromised? I would love to see the ability for clients to use flexible plans, some providers do offer these options, but the reality is they are not cost effective and at some point those costs have to be passed onto the client.
Unsuitable or offensive? Report this comment
Andy Milburn | 6 Jul 2010 9:06 am
Lacey - we have already priced it up so we're not one of those reinsurers putting up barriers to this.
We'd need to introduce certain rules around when the reinstatement could miss back premiums - eg in the event of compulsory redundancy, but we've figured out those too...
Solvency II may increase premiums for clients. If that happens then the older cover may be cheaper even thought he client has aged...
Unsuitable or offensive? Report this comment
Phil Castle | 6 Jul 2010 9:48 am
sounds a good idea to me.
Unsuitable or offensive? Report this comment
Anonymous | 6 Jul 2010 2:44 pm
retention is less costly than gaining new clients there is no question of that; the issue for me would lie in allowing clients to flex in and out........Even though the intention may be to simplify the process, the rules around the application of the option may be harder to sell and complicate matters further. Potentially turning the client off to this option...that said, if Solvency II does increase base premiums it might be the most sensible option...
Unsuitable or offensive? Report this comment
Phil Castle | 6 Jul 2010 6:14 pm
I've re-read your article and it would be useful for you to clarify things a littlemore. You stated "Providers should also consider the acquisition costs of a new policy against a little flexibility to keep an existing client on their books". The key words being "a little flexability". I don't think it would be unreasonable for the FSA to turn round and say that in order to meet TCF requirements, "a little flexability" on reinstating a lapsed policy, subject to efficient tele underwriting within a period up to a maximum of say 6 months or 1 year in exceptionel circumstances would be unreasonable.
Is this the sort of timescale you were thinking of?
I particularly like the idea of when a client suffers a financial or otehr catstrhophe, then not suffering the catastrophe of loosing valuable cover and having to start all over again when their problems are resolved. I have had clients where this has happened (divorce, job loss etc), where it would be useful for them to be able to take a premium holiday knowing the price of re-instatement in advance (subject to continued good health) up to a year or even two later.
Unsuitable or offensive? Report this comment