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Royal Liver’s guaranteed CI cover follows ABI guidelines

Royal Liver has released details of its guaranteed critical-illness insurance plan which will comply with new definitions to be introduced by the Association of British Insurers.

It will be one of the first providers to introduce the ABI’s new definitions on critical-illness cover, which all providers have to implement by April 2007.

The guaranteed critical-illness insurance product will replace Royal Liver’s protection arm Progress’s existing reviewable critical-illness cover which will be withdrawn from the market on October 22.

Munich Re does not offer guaranteed CI and so will no longer back Royal Liver’s new CI plan.

The new guaranteed CI product is being reinsured by XL Re but Munich Re will continue to reinsure Royal Liver’s life, income protection and pension term assurance products.

Royal Liver chartered insurer Mark Davies says the provider decided to withdraw the reviewable rate product because it foresaw a number of risks to customers and to Royal Liver in continuing to offer the plan.

Davies says: “There is a small possibility that medical diagnostic advances and medical treatments will improve to the degree that CI claims will escalate very quickly and hence reviewable CI premiums will increase very rapidly.

“This is a structural problem with CI as it pays out on diagnosis of a condition rather than having the payment based on the financial impact of the condition.

The challenge for those companies to continue offering reviewable -ate critical-illness insurance is to be able to explain the risks to customers in a clear, fair and not misleading way.”

Torquil Clark Life Insurance director Jason King says: “This is a good move and demonstrates the renewed insurer confidence for the future of guaranteed-rate critical illness insurance.”


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