The below is a copy of my response to the Public Consultation document requesting input on the review of the ABI Statement of Best Practice for Critical Illness. I look forward to seeing the outcomes of this review and supporting the product develop and continue to help people when they most need it in the years ahead.
Alea response to ABI SoBP consultation
Having chaired what may turn out to be the last ever CI Statement of Best Practice Review in 2014 I’m impressed by the direction, quality and ambition of this piece of work. I’ve done my best to stick to the questions asked, and would of course be happy to elaborate on any answers given if it would be helpful.
1) Do you agree that the name of the document should be changed to ‘ABI Guide to Minimum Standards for Critical Illness Cover’?
Agree that Statement of Best Practice isn’t correct (although I don’t think that just because insurers sometimes offer more than the definitions necessarily makes them “better” – the balance between coverage and price is for an individual to assess where their “best” lies.)
If the name is used then there may be some confusion between “minimum standards” and “core conditions”.
I wonder if the guide shouldn’t just be called “ABI Guide to Critical Illness Cover”
2) Do you agree that it is right to include a narrative in the new Guide explaining the product, the Guide, and the key changes?
I think if this is intended to be a document that is ever read or used by a customer then the introduction pages need to be reconsidered. They are unlikely to have any interest in the history of this document, or critical illness as a product. I think much of this background is best shared separately, or as an appendix to this document rather than as the introduction to it or it risks becoming something only ever seen by technical experts at insurance companies.
3) Do you agree that the Guide should allow an exclusion for early stage papillary thyroid cancer?
Yes. Notwithstanding the comments below I think that this is an example of a diagnosis where treatment and prognosis have improved sufficiently that it is appropriate to exclude this from the general cancer definition.
I do have issues with two parts of the logic used to justify this:
- The claim on p.2 of the consultation document that “five year survival rates for stage 1 and stage 2 papillary thyroid cancer are virtually 100%”. Without spending too much time digging into the research here I wonder if there is confusion between the tumour size and the staging. For under 45s a stage 2 papilliary thyroid tumour is one which (as per CRUK website) is any size and cancer has spread from the thyroid to other parts of the body, such as the lungs or bone, and may have spread to lymph nodes. The definition actually rests on the tumour not having progressed to size T2 or caused invasion of lymph nodes, which matches the staging definitions for over 45s.
- The reference to there being evidence that the 2014 changes to prostate cancer have made it difficult or confusing for consumers to claim as evidenced by a 96% payout for cancer claims in 2016. In reality a very small % of claims made in 2016 would have been for policies sold with the new model wording from the 2014 SoBP – so I think it is a bit early to draw this conclusion (or at least not from this statistic alone)
4) Do you agree that the minimum standard for loss of limb should be enhanced to pay out on claims for only one limb?
No. I do not dispute the seriousness of the loss of a limb, but applying the current wording of this document I am not sure how the change is justified.
I note that in chapter 7 there is now no real guidance as to how you decide what wordings will or won’t be included in this document i.e. by % of companies adopting a definition or certain wording. In theory then it is irrelevant what % of the market currently have a one or two limb wording.
Reading 7.3.6 of the proposed new document it says that a change to model wording should only be made if:
- A clear issue that has resulted or is expected to result in industry-wide problems for customers and or insurers; and
- The full review concludes that the proposed change or changes will address that issue
On that basis the only reason to change the wording is if you think a media article in 2016 fulfills the criteria.
I am sure that that the prognosis in terms of lifestyle and mortality impact of losing a limb is slightly less severe than would have been the case 10 or 20 years ago. Therefore it is difficult to understand why you would decide to tighten the coverage now, other than for PR reasons for something that will have minimal cost. If that is really the flexibility you want to exert then you may want to reflect this in 7.3.6.
Finally, I note that the paralysis of limbs definition is still intended to apply to “the total and irreversible loss of muscle function to the whole of any two limbs”. This seems at best inconsistent given the impact on the individual is likely to be equivalent, and could even lead to surgical decisions being influenced by the possibility of an insurance payout.
5) Do you agree that the model wording for HIV should be removed?
I recognise the huge improvements in HIV prognosis, but overall I’m not convinced by the arguments made here.
Reading the detail given doesn’t strongly suggest there is compelling evidence to remove this definition now. The vexing question of “What is a critical illness?” is still not dealt with in the document, although I think all would in practice agree that it’s a combination of being life-threatening (or extremely serious) and / or having a severe impact on an individual’s life, as suggested by the commentary around this.
On that basis I’d put HIV up against conditions like Third degree burns and question whether the diagnosis of HIV has a significantly better mortality or lower impact on daily life to justify removing this definition now.
The evidence given is very high level – in particular that “Many people living with HIV report that their conditions has little impact on their working life”. This suggests that some people do find it has significant impact on their working life (and possibly even that for many it does have some impact).
6 Do you agree that the model wording for Terminal Illness benefit should be removed from the Guide?
Yes given it’s lack of use in Critical Illness, but I do think this needs to be covered somewhere by the ABI. Terminal Illness is the most common reason for customers to misunderstand Critical Illness. It is important for the ABI to spell out the distinction between the two and ensure some consistency on the minimum standards for Terminal Illness.
7 Do you agree that the ‘Any Occupation’ wording for Total Permanent Disability should be removed?
Yes – I think this does meet the requirement in 7.3.6 of potential industry wide problems and should be removed.
8 Do you agree with the expanded list of generic terms in the new Guide?
No strong opinion, but look appropriate and necessary given nature of product.
9 Do you agree that the sections in the descriptions on CI and examples of key facts documents should not be included in the new Guide?
10 Are there any other comments you would like to make on the proposed Guide?