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Future-proofing could close protection gap

Providers and IFAs paint a pessimistic picture of the protection landscape in this year’s Protection Review.

The annual review, edited by Bank House Communications and Le Beau Visage, contains a raft of criticisms from industry spokesmen who say the industry is not up to the revolutionary changes needed to plug the protection gap.

Bright Grey products dir-ector Roger Edwards says there is a lack of desire to challenge traditional thinking which is hampering any progress in the industry.

One option for change is to introduce future-proofing – where definitions are tightened to remove payments for mild and curable forms of illness and pay out when the illness becomes life changing – to CII.

One option proposed by Edwards is to develop impact-based definitions, where a specified impact on an individual’s lifestyle would be the trigger to pay rather than the illness itself.

Scottish Widows protection market director Nick Kirwan also backs future-proofing CI definitions.

He believes future-proofing will give insurers more confidence to predict future claims, creating a downward pressure on rates to help ensure that CII remains affordable.

Lifesearch managing dir-ector Tom Baigrie believes the Association of British Insurers should take on the CII claims issue with clear ex- planation as to how some rejected claims are spurious or caused by non-disclosure, as well as use claims data to better educate consumers. But the ABI does not see the benefit of collating this data and says there is no way of ensuring all figures can be compared fairly.

Edwards says: “Will anyone ever take the brave, long-term step of developing something new and relevant for consumers? The current environment suggests sadly not.”

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