As an example, take the Norbert family where Paul had been forced to give up his job as a driving instructor as a result of his bipolar disorder. Through the campaign he was helped to manage his condition, study for an Open University degree and return to his job.
Although other influences – for instance the push behind more affordable, limited term policies – will have contributed to an increase in sales, anecdotally the programme has proved a positive influence, too. For example, figures from Swiss Re’s Term and Health Watch 2018 show that while 96,889 income protection policies were sold in 2014, this has risen steadily to 121,084 in 2017.
The insurance industry is also looking at how it can make products more compelling for consumers. Katya MacLean, chief operating officer at Guardian Financial Services, is not surprised by the disconnect between the actual and perceived number of claims paid. “You can tell the consumer that you pay more than 90 per cent of claims, but this is fairly meaningless when they are taking out a policy that they do not fully understand,” she says.
“If someone is a bit nervous about the insurance industry’s reputation for paying claims, looking at the complex medical language in the definitions will do little to change their opinion.”
Ironically, in a bid to protect consumers by ensuring as much certainty as possible around claims eligibility, insurers’ definitions have become increasingly wordy. Although designed to make it easier to compare products, the ABI’s model wording for cancer demonstrates this perfectly. It runs to more than 150 words, including terminology such as ‘Gleason score’, ‘Binet Stage A’ and ‘TNM classification T2N0M0’.
Adding further consumer confusion is the industry’s current conditions race, which is seeing more and more full and partial payments being added to policies. To an insurer or adviser, a longer list may appear more generous but, from a consumer perspective, working out whether it is better to have a partial payment for low-grade prostate cancer or for Crohn’s disease can be bewildering.
At LV, Mr McNab says that any enhanced payments are designed with the consumer in mind. “Products are moving towards more severity-based cover to give customers more comprehensive financial protection,” he explains.
“If someone contracts a neurological condition while they are young, we would make an enhanced payment in recognition of the financial impact it would have on them.”
LV offers enhanced payments for 16 definitions. These include six neurological conditions when diagnosed before the age of 45, where 150 per cent of the sum insured is paid, and 10 claims that arise as a result of an accident – for instance blindness, third-degree burns and traumatic brain injury – where 200 per cent of the sum insured is paid.