Last month, the BBC’s Money Box covered the story of a protection customer who had seen her quoted life and critical illness premium rise by around a third after she disclosed a historic mental health issue.
The woman was taking cover as a parent of young children and had originally chosen an insurer after getting a quote from an online price comparison site.
Once she had been redirected to her chosen life office’s extranet, she made a disclosure of post-natal depression, which affects about one in five women according to mental health charity Mind, resulting in the hike to the standard rate.
The customer made the decision to reduce the amount of cover she was applying for, rather than pay the increased cost, leaving her family with less protection than she had hoped to provide. This example highlights three key areas which need our focused attention:
- We need to talk about mental health issues in a more nuanced way. Around a quarter of adults will experience some form of mental health issue each year and charities have worked hard in recent times to encourage people to talk about them. Many of our underwriting questions, however, remain behind the curve. Most applications ask whether applicants have had mental health issues, stress, depression or anxiety. Can you think of anyone who could honestly answer no? In modern parlance this is like asking whether customers have stubbed their toe. Let’s be smarter about telling customers what we need to know and why we want to know it.
- Underwriting mental health issues needs to be less blunt. Having accepted that we all suffer from time to time, some more seriously than others, we need to use sensible questions, coupled with fair decision-making. Loading by 30 per cent for an isolated incidence of PND seems draconian. As the complainant said, she would be happy for someone to explain why it is fair.
- We must allow health disclosures before we show prices. Most intermediaries, be they online or telephonic, still give a price before underwriting has been applied. This is outdated and misleading. Had the customer in the Money Box example disclosed her PND at outset, she would have seen the real prices from a range of insurers, not all of whom would have applied the loading her chosen company did. She would have ended up with more cover for her family.
On the programme, our industry was defended valiantly by one of its leading lights, Scottish Widows’ Johnny Timpson, who along with the Association of British Insurers made the excellent point that specialist protection brokers can help clients search out the right cover and can guide them in navigating the various underwriting approaches of multiple insurers.
This is good advice, but we can do more to avoid repeats of this type of problem and to show that we are more in tune with the public we aim to protect.
Phil Jeynes is head of sales and marketing at UnderwriteMe