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CI is irrelevant to today’s conditions, says Cowman

Critical-illness cover is stuck in the past and innovation is needed to ensure products are relevant to consumers, says Prudential head of protection Paul Cowman.

He says medical advances have brought the need to revamp the product as definitions drawn up 20 years ago no longer relate to today.

Pru is introducing a product at the end of May that is expected to take the form of a combined critical-illness and income-protection policy paying out in stages.

Cowman says the market has become too price-focused and insurance companies need to take more responsibility for ensuring consumers understand their products.

He says there is a huge discrepancy between what customers believe is covered by their policy and what is not actually covered.

He says intermediaries have an important role to play in the communication between providers and consumers but marketing material needs to be made clearer.

Cowman says: “Many policies do not work because the conditions they cover no longer meet the definitions of 20 years earlier. Market dynamics have created a price-driven industry, with one or two rate cuts every week, but no new illnesses are being covered.

“We know that people are prepared to pay more for better cover. The current product, paying out on a single payment, just does not work. The market is at a crossroads and needs to be shaken up.”

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