Insurers have made a commitment to explain underwriting decisions when they offer non-standard terms or are unable to offer cover.
The Explaining Underwriting Decisions agreement, signed by 19 insurers so far, relates to all decisions where an individual is declined or deferred cover, charged an increased premium or has a part of their cover excluded.
The agreement was produced by the Access to Insurance working group which was formed in 2018 and comprises members from the insurance industry, consumer groups and charities.
The guidance aims to improve the transparency of underwriting decisions to customers applying for life, critical illness and income protection insurance, and to increase consumer trust that underwriting decisions are being made fairly.
It comes into effect from December 1, 2021 and has currently garnered the support of 19 insurers.
Leo Miles, policy manager, financial services at Macmillan Cancer Support, which contributed to the development of the agreement, said: “All too often Macmillan sees the disappointment and distress that a fruitless search for protection cover can cause people living with cancer.
“They’re often left wondering why an insurer has taken a view of their current health that doesn’t fit with their own experience and deterred from continuing their search.”
According to the guidance, for customers with pre-existing medical conditions premiums may be higher or cover may be unavailable.
Alan Knowles, managing director of Cura Financial Services, said: “Most customers will understand an adverse decision on their insurance application, when it’s explained to them properly. However, the problem that has existed until now, is that it can be very difficult to find out why someone has been declined, postponed or rated.
“Some clients are pointed to their GP who then struggles to explain the decision, some are told it’s due to information on their medical report and some are just told it’s due to a condition they have like diabetes.
“But, this doesn’t help or justify the decision and can leave customers feeling mistreated. Being transparent when explaining decisions to customers not only helps them understand the decision, it also helps both advisers and customers when looking for another provider who might accept their application.”
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