The Association of British Insurers has published new standard definitions for total permanent disability as part of its updated statement of best practice for critical-illness cover.
The latest best practice statement follows lengthy industry consultation on how to rebrand TPD. The TPD clause within CI policies accounts for just 3 per cent of claims but, of that 3 per cent, over half of claims are declined because of consumer confusion about when they can claim.
As a result, the ABI has made standard TPD headings more descriptive in a bid to make the cover clearer and reduce the number of declined claims.
The terminal-illness definition has also been changed to reflect advances in medical science, with clearer definitions for cancer and Parkinson’s disease.
The best practice statement also includes a standardised wording for the pre-existing conditions exclusion for children’s critical-illness cover.
ABI assistant director of health and protection Nick Kirwan says: “The work on developing definitions for TPD and children’s cover will help ensure CI policies are clear and pay out in line with expectations.”
ABI members will have to implement the new wordings as soon as is practical and no later than the end of 2012.
Highclere Financial Services partner Alan Lakey says: “I do not think the clarity of the TPD definitions is the issue. The problem is that a successful TPD claim is assessed on whether the individual can carry out several task-based activities, which in my view is overly harsh.”