A report from financial research company Defaqto shows that progress in the past year by the critical illness industry to regain consumer trust has been undermined by what Defaqto describes as, ‘bad claims publicity, ill-judged press reports and unhelpful comments from the Ombudsman’.
Defaqto says the insurance industry did not capitalise on the opportunity to promote the Association of British Insurers' statement of best practice. The ragged and varied introduction, often with little information released to advisors or customers left many advisers and customers inadequately informed about the overall and company specific changes.
Defaqto criticises the ABI’s statement of best practice: ‘While the increase in the numbers of ABI model wording will bring clarity and consistency to the market, the guidelines no longer differentiate between core and additional conditions, leaving the consumer unsure of the value of conditions offered. This in turn has done nothing to reduce the ‘condition inflation’ that has affected the industry in recent years and which can be seen as a marketing ploy of questionable value to the customer.'
Defaqto principal consultant for protection, Nick Telfer, who has a solid insurance industry background, says: “The future for critical illness hinges on rebuilding customer trust and developing products to meet the modern consumer’s needs. I am concerned that neither the product development needed nor the education necessary to rebuild trust in the product is happening nearly quickly enough. This will inevitably lead to people being potentially left wide-open to the consequences of serious illness."
Nick Telfer adds: “The evidence from providers published statistics is that the vast majority of claims are paid and this is the message the industry needs to get across. We believe that rather than providers doing this individually, they need to work together through an industry sponsored campaign to promote the proposition to the consumer."
Critical illness: News update: June 2007
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