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Friends takes lead on non-disclosure with CI payout deal

Friends Provident has been praised for paying out on critical-illness claims which would otherwise be declined due to unrelated non-disclosure.

Friends will pay a proportion of the total claim. For example, if a claimant had been paying premiums of £40 but the non-disclosed information would have increased premiums to £80, Friends will pay out 50 per cent of the sum assured.

If the undisclosed infor-mation would not have increased the customer’s premiums if it had been detailed at the outset, the full sum assured will be paid.

Protection and actuarial manager Mark Jones says the aim is to build consumer confidence in critical-illness cover.

Jones says: “Friends Provident is in the protection business to pay valid claims. To be able to do that, we rely on the customer to provide us with all the information we need. Where we have found the non-disclosure to be a genuine oversight, we will now make an offer based on a proportion of the total claim.”

Industry commentators have reacted positively to the news and called on other insurance firms to follow suit.

Lifesearch head of protection strategy Kevin Carr says: “I think this is an excellent move. Some companies have already been doing this on a case by case basis behind the scenes so it is great that a company has confirmed it offic-ially for all cases. This should be the industry standard.”

Direct Life & Pensions Richard Verdin says: “It is the right thing to do and I think proportionality is appropriate. A lot of providers have been doing this for a while but Friends Provident has just formalised it. There is no doubt that it will become common procedure. Only a cynic who did not care about his clients would resist it.”

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