A rep from a major insurance provider last week mentioned the company was looking to revamp its critical illness cover plan to bring it more in line with the competition, which made sense looking at its sales statistics on CIC.However, one thing made me stop and think. When discussing the number of conditions covered, the rep said: “Yes, but we do not want to play that game. What is the point of having 40 conditions on your plan when you are only likely to claim on less than a third of them?”
I had to take a breath and then realised this is right. Insurers, in a bid to grab more headlines and business from the front-end salespeople add extra bells and whistles that do not necessarily create protection value.
Claim statistics from four key insurers show there is one clear commonality – cancer was the biggest cause of claims on CI in the UK in 2009. The highest volume of claims, the highest level of payouts and the highest overall individual sums paid all derive from cancer-related diagnosis of a critical illness. These are followed by those regular causes of ill health – heart attack and stroke.
Since dread-disease cover was created in 1983, the staple list of conditions covered has not shifted that much. Over the last 27 years, medical technology has improved significantly and the speed, efficiency and cure rates of many of the illnesses covered have improved. In fact, it could be questioned as to whether some of these illnesses should be considered a dread disease at all now.
This tells us that what the industry should be focusing on is improving its own critical-illness offering through innovation rather than simply adding conditions in a race between insurers to see who can offer the most.
Some insurers have made great improvements, such as Axa’s introduction of mastectomy cover as a new and crucial addition to its CI offering, but more needs to be done by the sector as a whole.
PruProtect severity-based coverage is a good example of successful innovation. It is a bold product development that is having an impact on clients’ lives, due to the unique way in which it pays out. It has been well received by our clients, as has Axa’s mastectomy cover. Other insurers are also working hard.
So we know that some in the industry have risen to the challenge of providing innovation in major areas of illness instead of looking to tinker round the edges.
Obscure conditions can have their value, but not when it is at the expense of genuine transformation.
So, a challenge to insurers is to be bold with your CI product and make it relevant to a 21st century audience – not a 20th century one.
Duncan McMillan is head of sales at LifeSearch