The Association of British Insurers has published its updated statement of best practice for critical illness cover, which includes new standard definitions for total permanent disability.
The trade body announced last November that the TPD term would be kept in its latest statement of best practice, after a drawn out industry consultation over how TPD should be rebranded.
The TPD clause within CI policies accounts for just 3 per cent of claims, but out of that 3 per cent over half of claims are declined owing to confusion among consumers about when they can make a claim.
A new set of standard definitions has been included in the ABI’s latest standard of best practice, with more descriptive headings which aim to make the cover clearer and reduce the number of declined claims.
The definition of terminal illness has also been changed to reflect advances in medical science, with clearer definitions for cancer and Parkinson’s disease.
The pre-existing conditions exclusion for children’s critical illness cover have also been standardised.
The ABI says for some insurers this condition is in the top five causes of claim, predominantly for children diagnosed with leukaemia.
Assistant director of health and protection Nick Kirwan says: “The new more descriptive headings and standard definitions will make the scope of TPD cover much clearer. The project has attracted a lot of interest from many countries as these are the first standard TPD definitions in the world.
“The work on developing standard definitions for TPD and children’s cover will help ensure that critical illness policies are clear and pay out in line with customer expectations.”
ABI members will have to implement the new wordings as soon as is practical, and no later than the end of 2012.
To see the ABI’s updated statement of best practice in full, click here.