Following an extensive consultation, the ABI is planning to rebrand and standardise definitions of the Total Permanent Disability (TPD) benefit in Critical Illness (CI) insurance policies, to improve clarity for consumers.
It is proposed that a new set of standardised definitions will go hand-in-hand with improved education for consumers, financial advisers and sales forces.
The ABI consultation was focused on measures to improve customer understanding of TPD, and therefore to reduce the number of declined claims. The vast majority of consultation respondents, consisting of insurance companies and other key stakeholders, agreed that the work the ABI was doing to improve TPD was worthwhile.
Following a stakeholder workshop to take this important work forward, the ABI has agreed to:
- Propose a set of clear and easy to understand standard definitions that build on the concept of TPD (for example, removing use of the words ‘total permanent disability’ that cause so much confusion for consumers).
- Produce a standard set of educational materials for insurance companies and advisers to use, explaining clearly the changes and what customers can expect from their policies.
- Test the proposed definitions with consumers.
- Consult all stakeholders on the new definitions.
- Issue a new Statement of Best Practice for Critical Illness Cover that will include the new set of definitions.
Nick Kirwan, the ABI’s Assistant Director, Health and Protection, said: “It is vital that customers understand what their Critical Illness policy does and doesn’t cover. The approach we are adopting builds on our previous work to create more descriptive headings and clearer definitions.
“We were very pleased with the level of response to our consultation. We heard that people want standard definitions, and that education and clarity are key to improving understanding. We have more work to do, but we now have a clear view of how to go forward and achieve these aims.”
