Critical illness policies: Our 2017 survey

  • Gain an understanding of how the CI industry is evolving
  • Learn about the components of CI cover
  • Grasp how advisers select the most suitable CI provider

New progress

This year’s survey has seen a decline in the number of policies assessed, but this is largely due to Aviva streamlining its offering from six to three. Noticeable absentees this time include NFU Mutual, which has recently overhauled its protection suite, and the Prudential’s insurance arm, VitalityLife. But Scottish Widows has returned to the study this year.

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A number of channels are available for firms to distribute CI plans. Customers can go direct, use a company representative, or an adviser. Ideally, consumers should seek advice, not only to ensure that they understand their plan, but also to have confidence that it is set up to meet their individual needs. 

Total sales of CI plans are shown in Table 1, and despite only three firms providing figures, the results are encouraging. LV and Zurich have both witnessed a sharp uptick in sales compared with last year’s survey: LV’s 5,706 compares with the 3,780 sold in 2016, and Zurich’s 16,011 is up on the 13,508 reported last year.

Royal London’s 19,776 is down slightly on the 21,606 reached by the same point in 2016, but the firm has been growing business rapidly over the past few years nonetheless. Full-year figures show all three firms saw a sharp uptick in sales between 2015 and 2016.

Alan Lakey, director at CIExpert, sounds a word of caution on sales figures. He notes that it is tough to differentiate between business that is new and that which is as a result of re-broking. 

“Critical illness lends itself to re-broking because clearly, if I’ve arranged the best plan in the market in 2012 and now I can give the client an additional 40 conditions at very limited extra cost – subject to them being able to afford it – they are bound to say yes.”

Nonetheless, Ms Gilchrist says the recent folding of Bright Grey and Scottish Provident into the Royal London brand has aided the firm. She says: “This has enabled us to grow and develop our protection propositions, which has in turn extended our reach with both advisers and customers.

“We improved our online service last year to make life easier for advisers by offering estimated decisions for non-standard cases and the ability to give likely costs for rated cases.”

Zurich has benefitted from a similar upward trend; the 43,602 plans sold last year represent a marked improvement from the 36,105 sold in 2014. Mr Sadler comments: “Over the last couple of years Zurich has made major enhancements to its critical illness. Last year, we paid 95 per cent of protection claims to the value of £224.6m benefitting 2,600 retail customers.”

Claim queries

The data compiled regarding claim rejections largely correlates with the ABI’s findings (see Table 2). Rejections fall into two categories: either due to non-disclosure, or because the condition is not covered under the plan. Of the two, the latter is far more frequent.