Protection providers are kidding themselves if they think “tinkering round the edges” of critical illness cover (CIC) policy definitions is innovation, Phil Jeynes has claimed.
PruProtect’s head of account development said that while providers should be congratulated for adding new, broader definitions to CIC policies, ultimately they are failing customers by not covering some conditions regardless of severity or type.
He said: “Fiddling round the edges of critical illness cover by adding definitions that competitors added six months before isn’t what I call innovation.
“It is great that CIC policies are evolving and are able to adapt to cover more conditions in a more logical way, but until the whole policy works that way, it does not go far enough.
“Consumers already expect policies to pay out if they have a heart attack, irrespective of severity – when they don’t, it damages our reputation further.”
Mr Jeynes added that long lists of jargon, showing that CIC pays out on all cancers or strokes, is “disappointing” to customers who expect policies to pay out on this regardless.
His comments came as Swiss Re published an eight-page report, Term & Health Watch 2014, which said that 2013 saw a year-on-year decline in new business across all protection products.
Term assurance fell 17.4 per cent, critical illness saw a decrease of 20.5 per cent, income protection dropped 24.4 per cent and sales of whole-life cover fell 20.5 per cent.
“In some ways, comparing 2013 with previous years needs to be treated with caution,” the report said.
“Gender-neutral pricing created initial uncertainty as the market settled to the new model at the beginning of the year. Furthermore, changes to the taxation of life assurance funds saw prices generally increase.”
Andrew Swallow, director of London-based Swallow Financial Planning, said: “There are two issues here. There was a spike before the gender rules, and then RDR coming in has meant the emphasis for advisers has moved towards high net-worth. I think that has contributed to these figures.
“Protection insurance is probably lower down the list than assets under management, which is all that many advisers seem to be interested in.”
