As our annual critical illness (CI) survey enters another year it would be easy to assume the market has experienced little in the way of transformation. Legislative changes, such as those announced in the government’s annual Budget, rarely have any impact on the personal protection industry. But although the state (and to a certain extent the regulator), have been reluctant to tinker, adjustments are still afoot, with the evolution of CI being driven by the industry itself.
The role of a CI plan is to pay out a lump sum on diagnosis of a specified disease or illness. This can help to reduce the financial strain at a time when the individual needs it most by reducing or completely clearing a mortgage, or funding specialist medical treatment to aid recovery.
Because of this perceived simplicity, when the Retail Distribution Review was introduced in 2013, those who were wishing to advise on protection alone were not required to complete the Level 4 qualification. Therefore, unqualified advisers could make CI recommendations.
Despite this, though, it is clear that the majority of firms still believe that CI is an area where the help of a qualified professional should be sought.
“Our relationship with advisers is hugely important,” says Jennifer Gilchrist, senior product development manager at Royal London.
“With the advice channel coming under increasing pressure from today’s internet-savvy generation, I feel it’s our duty as a provider to help advisers respond to threats such as direct sales and arm them with a proposition that adds genuine value to the protection sale. That’s something we can do by offering additional support services.”
Royal London is not the only firm to be eyeing new ways in which it can help advisers. Zurich Insurance Group has recently launched a protection hub – a new online quote and apply portal. It includes mobile and tablet compatibility, easy user interfaces and the ability for multiple applications.
“We’ve had great feedback on the usability of this new system and are seeing more and more advisers using it as a result,” Richard Sadler, Zurich’s head of retail protection propositions, says.
The number of people contracting serious illnesses remains a real cause for concern. Nearly 500,000 people were newly diagnosed with cancer in 2015, broadly in keeping with figures reported for previous years.
But cancer is not the sole serious illness to affect lives and a number of others can have a serious impact on health and longevity. Money Management has compiled a list of those in this survey, and although the majority of other conditions are generally less common, the devastation caused can be equally or, in some cases, even more severe.
The importance of personal protection policies should not underestimated, as recent data shows. According to the Association of British Insurers (ABI), a record £4.7bn was paid out in personal protection claims during 2016 – equivalent to around £13m per day. As well as critical illness, this also included life assurance, total permanent disability, whole-of-life assurance and income protection.
The figures represent nearly 167,000 claims, with 97.3 per cent of new claims being successful. With regards to CI, the total value paid out topped £1bn, with a 92.2 per cent payout rate and an average claim value of just under £68,000. These figures are largely unchanged year-on-year.
Questions appear on the last page of this article.