The Association of British Insurers has published proposals to change its minimum standards for critical illness insurance.
The trade body is consulting on changes which include the deletion of the definition of “HIV” so firms can use the wording they consider appropriate to describe any cover they offer for this condition, and the deletion of the definition of “terminal illness” as this was rarely used in critical illness cover.
The guide aims to help customers and advisers compare products more easily so they can make informed decisions when considering buying critical illness insurance.
Raluca Boroianu-Omura, the ABI's assistant director for health and protection, said: “Critical illness insurance is a crucial safety net to protect individuals and their families in the most difficult of times.
"Last year, insurers paid out just over £1bn, with 92 per cent of claims paid. The changes we are proposing to the guide aim to make it easier for advisers and consumers to compare critical illness policies.
"During this public consultation we want to hear as many views as possible to ensure that the guide meets its aims.”
The ABI has also proposed changing the name of the guide from the Statement of Best Practice for Critical Illness Cover to the Guide to Minimum Standards for Critical Illness Insurance.
The guide is also being reorganised so it is easier to navigate and understand.
Among the other proposals is the allowing for an exclusion of early stage papillary thyroid cancer from the minimum definition of cancer because of medical developments and its very low severity.
The new guide would also specify that cover for “loss of hand or foot” means any limb as defined, and delete an option for the definition of “total permanent disability” that was based on the policyholder being unable to perform any occupation due to developments in claims handling.
Alan Lakey, partner at Highclere Financial Services, said: "Most of these changes are sensible. With the total permanent disability one, the Financial Ombudsman Service has said they don't accept the definition and consider suitable occupations.
"If you took it to its logical extreme you could lose two legs and one arm and still be able to answer the telephone. It is a no claim wording."
Mr Lakey added that the ABI has clearly rowed back on some of its earlier proposals, which he had been consulted on previously and which would have meant removing the stage one cancer definition.
He said: "It would help them where medical technology highlights the condition earlier but the man in the street doesn't know and doesn't care about that. What he cares about is that he has been told he has got cancer."
damian.fantato@ft.com
