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Why critical illness cover is broken – and how it can be fixed


Whether critical illness cover is still suitable for purpose is an ongoing debate among the industry. While most agree change is needed, with the exception of adding or removing a few random conditions it is largely left alone.

Do I feel critical illness cover is broken? Yes. But for a different reason than many. I believe the plans are too exclusive to the side of the population lucky enough to not have been diagnosed with a serious health condition.

As a special risks broker, we come across a number of clients not eligible for the majority of critical illness plans on the market, including those with HIV, diabetes, heart complications, multiple sclerosis and strokes.

In the UK, the number of people living with diabetes has increased by almost two thirds in the last decade, and the number living with HIV by nearly three-quarters.

I spoke to three clients in the last month alone diagnosed with heart conditions based on chance findings.

They were all young and asymptomatic. While we have been able to provide critical illness cover and sickness benefits for each of these, the options were extremely limited. How are the vast majority of advisers expected to provide these plans?

So why won’t insurers cover clients with these conditions? It is simple really. If somebody has a heart condition, HIV or diabetes they could be at a higher risk of having illnesses like heart attacks and strokes.

With cancer still taking the lead in critical illness claims, I wonder why we cannot exclude groups of conditions from the plans and let the adviser and client decide if it is right for them? Surely some cover is better than none?

The best reason I heard recently for not covering somebody with a congenital heart condition (asymptomatic with no medication) was: “What if the client
has a heart flutter at the top of the stairs, falls down and bangs their head?” But surely this could happen to anyone. Is this really a fair reason to reject somebody for something so important for financial protection?

There are providers moving to the exclusion method in certain areas. For example, people with low grading cancers can get critical illness cover with all cancer, or groups of cancer, excluded.

As yet, however, there is little available for people with heart trouble, multiple sclerosis, HIV or type 1 diabetes.

We have been providing advice to the National Aids Trust on the limits of financial protection available to people living with HIV. While as an industry we can offer some cover through fringe products and wider planning, I cannot help but wonder when the standard market and reassurers will complete the missing pages in underwriting manuals and start thinking of the future.

It is time for the market to wake up. As a nation we are seeing more and more people with pre-existing conditions. And as genetic testing becomes more widely available it is likely more will be aware of conditions that run in
our family.

As the country evolves, so too must the plans we offer. Not by adding more random conditions nobody has heard of, but by improving how we offer these plans without bias and discrimination.

Alan Knowles is director of Cura



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There is one comment at the moment, we would love to hear your opinion too.

  1. And yet another vested interest looking for an opportunity to promote their cause…

    I will provide you with the same reply as I did to Alan Wilkinson on Cover the other day.

    All this is easy to say from as someone whose organisation actually carries no risk in writing high risk life insurance.

    There is a reason that insurers risk appetites are not greater for higher risk CI and IP contracts. Firstly they have little experience of these risks; secondly there is little data to understand the likely claims incidence associated with extreme or exotic risks, thirdly heavily rated or excluded business completes in lower numbers, lapses more frequently, carries higher expenses and is thus more expensive to write and lastly their underwriters probably don’t have the skills sets to do so.

    Like most insurance markets, the business models of main stream life insurers are based around volume and reasonable levels of risk. As with other insurance sectors if you want to write specialist risks then you are likely to only be serviced by niche providers.

    You should sit down with someone who understands the economics of high risk business and educate yourself before you start posting ill thought through solutions on-line. If the CI market is broken then the reasons are complex and will not be solved by an influx of higher applicants.

    When will publications like MM stop acting as forums for so called experts who actually understand very little about the business….

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