Bupa, Norwich Union. Legal & General and Friends Provident have slashed their rates on critical-illness insurance in the opening shots of what is predicted to be a rate war in the sector this year.
Last year’s premium battle was waged mainly on life insurance products but Lifesearch head of protection strategy Kevin Carr is forecasting the price war will move into the critical cover market.
Carr says: “There is potentially more reinsurance capacity with the relaxing of the rules around this and the ABI’s new critical-illness definitions mean there is more certainty in the market which will lead to more price cuts in the CI arena. We have already seen four providers slash their rates in January.”
Bupa announced in January it was cutting CI rates by 4 per cent and it will also slash income protection premiums by 7 per cent on average.
Bupa Individual Protection product manager Steve Casey says: “We are delighted to bring these reductions to the market and assist IFAs in bridging the protection gap, especially in the light of the PPI review and the removal of tax relief from pension term assurance products.”
Bright Grey products director Roger Edwards says: “The implication is that the new ABI definitions, which come in on May 1, should provide a lot more stability in the market. Although we have not seen too much evidence of a rate war in critical illness yet, I think it might happen this year.”