I was fascinated to hear Royal London is going ahead with its proposal for a life insurance policy just for diabetics. As owner of a firm that specialises in placing cover for clients with pre-existing conditions the news is very exciting.
From my experience, the most difficult cases to place are type 1 and type 2 diabetics with high/unknown HbA1c readings or other complications. HbA1c is a test used to measure the blood glucose levels of diabetics. I certainly think the new plan will have a place with the well controlled clients and I am intrigued to see if it will help these others.
This development is particularly interesting, as the industry needs innovation to prevent it becoming stagnant. There is a reason the Vitality Life model worked so well and established it as the second biggest provider in the protection intermediary market last year. Protection can be boring to talk about and the process can seem so long for consumers. Anything that makes it more accessible has to be a good thing.
That being said, I cannot help but feel disappointed this innovation is restricted to life cover. Over the years, we have spoken to thousands of customers with diabetes and it is very rare they cannot get cover on the standard market. Yes, the process can be a little painstaking with conversations about unknown HbA1c readings and other complications such as retinopathy, but we can arrange cover in most cases.
No doubt the policy will increase sales of life insurance to clients with diabetes mellitus but will this be because the plan has more attractive premiums or because it presents a great marketing opportunity to the four million people in the UK living with the condition?
This is a great piece of innovation from Royal London but I think the most profound change will be what it (or others) does with it next. For example, what about critical illness cover for diabetics?
With only three providers offering cover for the best of best cases (and one of those likely to stop by the end of the year) there is huge room for improvement. But who will be brave enough to make critical illness cover more accessible to the millions of people living with the condition?
And it does not need to stop there, of course. There are many other conditions that people can control and improve based on their lifestyle choice. I have had countless conversations with insurers over the years about offering cover to people with high BMIs and incentivising people to lose weight.
What about other conditions that can be improved by lifestyle and healthy living, like hypertension, cholesterol and HIV. Is this something Royal London may consider if its pilot diabetics policy is successful? Or will another insurer seize the opportunity first? Could the industry be around the corner to offering cover that improves people’s lives and thus reduces the need to claim on these plans? Time will tell. But I hope so.
Alan Knowles is owner of special risk experts Cura