Life Insurance  

Protection advisers warn of underwriting difficulties

Protection advisers warn of underwriting difficulties
 Credit: Lynne Cameron/PA Wire

Some protection advisers have reported difficulties in finding cover for clients due to underwriting changes, alongside a warning that declined consumers could feel “let down” by the industry.

Naomi Greatorex, managing director at Heath Protection Solutions, said she had seen a “very noticeable shift” in how insurance providers approached underwriting during the pandemic.

Describing a “much more risk-averse attitude” to providing cover, Ms Greatorex said a number of clients, who would have likely been covered before the pandemic, had been declined.

Likewise Alan Knowles, managing director at Cura, said “almost all” insurers had applied restrictions in underwriting due to the coronavirus, with some showing “greater concern” over insuring clients with diabetes or heart conditions, for example, or lowering the maximum age at which customers can purchase cover.

Mr Knowles added that people with comorbidities or more serious health conditions were finding it “much harder” to purchase insurance, but said that most customers would find cover, albeit perhaps with higher premiums or more exclusions.

David Mead, founder of Future Proof and joint head of protection at St. James’s Place Protection Planning, also said his firm was finding it “more difficult” to secure cover for certain clients with pre-existing health conditions.

According to Mr Mead, his firm would have been able to secure cover for these clients before the pandemic, albeit with a loading - an increase to a premium if a client’s risk is higher than normal.

Cura’s Mr Knowles said that most insurers had restricted their maximum loadings, which would prompt cover to decline or postpone earlier.

He said: “Pre-Covid, most insurers offered premium increases up to 300 to 400 per cent, with one insurer going to 750 per cent. Now we're seeing mainstream insurers decline customers at approximately 200 per cent, although this can be as low as 50 per cent for older customers.”

Future Proof’s Mr Mead said the policy of capping maximum loadings was most commonly affecting clients with conditions that make them more vulnerable if they contracted the coronavirus, such as a heart condition, a high body mass index or severe lung conditions.

Mr Knowles commented: “Whilst advisers don't want to see restrictions like this, and we may disagree with some of the restrictions, we also need to understand we are still in the middle of a pandemic and there are spikes happening across the globe, which will undoubtedly be causing ongoing concern for insurers and reinsurers."

Jeff Woods, campaigns and propositions director for PMS and member of the Protection Distributors Group (PDG), agreed it was understandable that providers had to “have a reaction” to the coronavirus.

Mr Woods said a discussion with providers was on the agenda over whether they will reassess underwriting as more is known about the virus. “It is restricting the ability of what you could say are the most in need, vulnerable customers in getting cover because of an unknown.”