Critical confusion

Back in 1999 the Association of British Insurers (ABI) introduced model wordings for CI conditions to standardise the product and put an end to the confusion around cover. By 2011 it had defined standard definitions for 23 different conditions including cancer, heart attack and stroke.

In addition, to allow insurers to be recognised as offering enhanced cover, the term ABI+ was introduced to indicate the definition goes beyond that of the model wording. Subsequently it is not uncommon for insurers to offer 10 or more ABI+ definitions on their plans, which can bump the total conditions covered to in excess of 40. For example, on its guaranteed CI product Zurich includes 10 ABI+ definitions, covering 48 conditions while, of the 56 illnesses and conditions Skandia’s plan covers, 18 are ABI+.

Fifty shades

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But, while the ABI definitions ensure some standardisation across plans, there can be huge variation in the enhancement offered by an insurer under the ABI+ definition. “It is a bit of an arms race,” says Richard Sandler, head of retail protection proposition development at Zurich. “Theoretically an insurer could change an ABI definition by a tiny amount, say move from 24 hours to 23 hours and 59 minutes, and claim it was ABI+. This would not really enhance the cover and can be misleading to consumers and advisers.”

A good example of the variety of ABI+ definitions available is the cover provided for third degree burns. The ABI definition states it applies to ‘burns that involve damage or destruction of the skin to its full depth through to the underlying tissue and covering at least 20 per cent of the body’s surface area’.

According to comparison tool CIExpert, while five insurers including Foresters, NFU Mutual and Scottish Widows adhere to this, there are a further seven variations under the ABI+ definition. Although more generous, typically triggering a payment where a proportion of the face or head suffers burns, attempting to compare them can be difficult.

For example, LV= enhances the ABI definition by stating it will pay out if the damage covers at least 20 per cent of the body’s surface area or 50 per cent of the surface area of the face or head. Aegon goes a step further by stating that in addition to the ABI’s 20 per cent of the body’s surface area, a claim would be paid if the policyholder suffered 50 per cent loss of the surface area of the face or 30 per cent loss of the surface areas of the head and neck.

Slightly more generous, Ageas, Aviva, Beagle Street and Legal & General offer to pay out if 20 per cent of the surface area of either the body or the face is damaged. And further detail is added by Friends Life and Skandia, both of which add cover for 30 per cent loss of the surface area of the face, where this includes the forehead and ears.

Creating confusion

The situation gets even more complicated for a benign brain tumour, with some policyholders standing to have a claim paid on one policy but declined altogether on another. While the ABI definition states that this is “a non-malignant tumour or cyst in the brain, cranial nerves or meninges within the skull resulting in permanent neurological deficit with persisting clinical symptoms but excluding tumours in the pituitary gland or angiomas”, there are plenty of variations under the ABI+ banner.