Protection  

Critical confusion

Thankfully, with the number of ABI+ definitions increasing on a weekly basis, further clarity on how the market applies them is likely this spring. Following a public consultation on its Statement of Best Practice for Critical Illness Cover towards the end of 2013, the ABI is expected to publish a revised version by early April. This will take into consideration all aspects of the way the industry operates including the use of ABI+ definitions.

Although this guidance is still to be finalised, those who have seen early drafts say it is looking to state that an ABI+ definition should only be used where it creates a material increase in the likelihood of a claim.

This move would be welcomed by insurers, especially as it may prevent more drastic action if the overuse of ABI+ definitions did lead to greater confusion. As well as being anti-competitive, a step such as reverting to the core conditions, could also disadvantage consumers. Dougy Grant, protection director at Aegon, explains, “There is a need to set minimum standards and the ABI has fulfilled that role effectively for a core set of conditions. The important point is to communicate clearly about what is - and is not - covered to allow fair treatment without stifling innovation.”

Creating a balance between product innovation and clarity for consumers is essential. With insurers keen to extend sales of CI, empty marketing messages could potentially damage the reputation of this product.