Critical illness cover? Let’s kill it off

Ian Sawyer, managing director of Assured Futures, puts forward some controversial views on the relevance of critical illness cover compared to income protection.

I’m not a lone voice on this. It’s an opinion shared pretty much unanimously with my colleagues and many peers.

In my view, Critical Illness (CI) cover should be marginalised or even removed as a product because it gets in the way of Income Protection (IP), which is a far more superior product in terms of suitability and customer needs.

Yet all too often IP takes a back seat, especially in the mortgage industry.

If the IP market is ever going to achieve the widespread and sustainable growth it deserves, we need a radical rethink about both the relevance of CI and the way in which IP is structured, positioned and sold.

I sometimes think the industry is a little bit obsessed with CI – and the ever-changing list of illnesses and definitions which are becoming mind-boggling.

Has it become a victim of its own success; and is it time to move on?

AIG’s Key 3 is well intended and designed to help simplify the product. But in our view, it can also have the opposite impact; because unless you only sell that product it is just another version of CI for advisers to describe to customers on top of everything else.

Likewise, Vitality’s Serious Illness Cover is an excellent concept, but the paperwork is vast and it has created too much unnecessary complexity.

Something is typically better than nothing, but how much confusion might arise at claim stage about how much is paid?

Likewise, we should remember that many people don’t understand the financial implications of ill health, and some would consider blowing a lump sum – even a small lump sum – given half the chance.

Whereas an income through an IP policy removes both the confusion and the temptation.

I heard a statistic recently; 72% of all CI payments go towards replacing lost income. I suspect it’s actually a lot higher than this because in reality people rarely ‘need’ a lump sum.

Everyone likes the idea of a lump sum but how many people will use it to adapt their home or spend it on the medical care they need? The figures show it mainly goes towards loss of earnings.

We have a mortgage advice industry that is fixated on selling the wrong product.

All mortgage payment protection should be based on maintaining the mortgage.

I am bemused why IP providers don’t start from the default position of Life with IP rather than Life with CI.

If a Life & IP hybrid product were more readily available and quotable by advisers, there’s a chance that the right product might be sold more often.

Menu based products have been with us for decades and they effectively allow Life & IP as separate benefits, but this hasn’t helped mortgage advisers.

To me, this suggests that the comparison services are not wide and/or user-friendly enough and the product suite does not meet the need.

It is great to see British friendly adding death benefit on their IP cover – but the industry needs to go a long way further and build proper Life & IP products to rival Life & CI.

Updater Inc to provide relocation platform to Liberty Mutual Insurance customers

New York based Updater Inc (ASX:UPD) has signed a business product pilot with Liberty Mutual Insurance, integrating Updater’s relocation technology platform for its customers.

Updater’s technology has garnered a share of U.S. household moves, by providing a centralised tool for people to manage services such as mail forwarding, transferring utilities and updating addresses.

The pilot with Liberty Mutual will last for 12 months and is structured as an iterative and collaborative partnership to test various communication strategies with movers.

he pilot will begin after a three-month technology integration period.

The primary goals of the pilot are to prove the value of the Updater platform for Liberty Mutual and other businesses in the industry, and simultaneously improve the Updater experience for movers.

The partnership with Liberty Mutual, a Fortune 100 company with over 50,000 employees and nearly US$40 billion in annual revenue, is a significant achievement for Updater.

Updater has received significant investments from U.S. venture capital firms including SoftBank Capital and IA Ventures, prior to listing on the ASX in December 2015.

Updater is traded in Australia through Chess Depository Interests (CDIs) for a foreign company on the ASX.


If insurers want their customers to be honest they should try treating their customers better

Fraud is immoral whoever the victim, but there is a reason that consumers don’t feel that way about their insurance providers

“A blow for honest consumers,” is how the insurance industry reacted to the Supreme Court ruling that “collateral lies” that do not affect the validity of an insurance claim can be acceptable.

One wonders whether the industry would be willing to say the same about the practices uncovered by the Financial Conduct Authority in a report on the activities of appointed representatives (ARs) paid to sell – or should that be mis-sell – its policies. I rather doubt it.

The timing of the release of the FCA’s “thematic review” into ARs could hardly have been more perfect, coming just two days after the Supreme Court’s ruling.

If the industry wants to understand why people don’t see any problem with lying to their insurers, the review provides them with one. It just might be because of the incidences the watchdog found of insurance salesmen who don’t see any problem with lying to consumers.

Appointed representatives are people hired to sell insurance by other companies, usually, but not always, insurance brokers. These “principals” are supposed to take responsibility for what their ARs get up to.

The FCA found incidences of shoddy practice at more than half of the 15 firms it surveyed. In some cases that practice went beyond shoddy and became sharp leading to people being sold policies that were worthless to them, which they weren’t eligible to actually claim off, which they didn’t understand.

By now you probably know the drill: Dodgy salesmen going off script. Automated menus that didn’t work properly. Falsified documents. Vulnerable customers being pressured to buy useless products. Two firms have been told to commission reports on their operations that may lead to disciplinary action.

But, but, but that isn’t us, parts of the industry will doubtless cry at this point. That won’t wash. For a start it’s cheap to wash your hands of practices you know are going on and that you benefit from.

More to the point, this is by no means the first report exposing bad practice in the insurance industry. If you look back through the archives of the FCA, and through those of its predecessor the Financial Services Authority, you will find similar reports covering other parts of the industry.

And that’s just the out and out malpractice. For too many “honest consumers“ just filling legitimate claims can be a miserable experience. I hear from them all the time. I have been in that position.

The case the Supreme Court ruled upon doesn’t involve a typical consumer. It revolved around a Dutch cargo ship, which found itself in difficulties after its engine room was flooded.

The owners were found to have lied by saying their crew couldn’t investigate an alarm, because the ship was rolling in heavy seas.The accident was caused by bad weather, which led to court to decide that the lie was irrelevant to the claim.

Could it really push up premiums across the industry? Depends on how the judgement affects the mass market. Insurers are currently considering its implications.

Regardless, I understand that filing dodgy claims pushes up the price of premiums and I don’t believe fraudsters should be allowed to exploit anyone, up to and including insurance companies. Crime is crime.

However, it is because of the bad behaviour and bad practice of the type highlighted by the FCA’s report that people don’t see ripping off insurers as at all immoral. Until the industry recognises that and does something about it, the prevailing attitude will be “if they’re allowed to rip us off why shouldn’t we be allowed to rip them off”.

eServices Partners with Insurance Journal for the 2017 Risk Management Summit

Peabody, MA, August 7, 2017 – eServices, a specialized platform focused on providing turn-key risk management, claims, marketing, and technology solutions through its various entities, is pleased to announce that Insurance Journal will be the Media Sponsor for the 2017 Risk Management Summit at the Cosmopolitan of Las Vegas, October 15th – 19th , 2017.

“We are excited to have Insurance Journal become involved in the 2017 Risk Management Summit,” Brian K. McCarthy, CEO of Energi and eServices Companies. “As the Summit vision has expanded over the years, our partnership with Insurance Journal will allow the conference to be offered to more risk management and insurance professionals in the small and middle market companies.”

The Summit will feature over 40 Breakout and General Sessions, over 120 thought leaders and a comprehensive trade show with over 60 exhibitors in a wide spectrum of industries. Continuing Education credits are available for Adjusters, Agents, Attorneys, Human Resources, and Certified Safety Professionals. The meaningful claims and risk management sessions and comprehensive tradeshow attract insurance companies, independent insurance agents / brokers, and small and middle market companies.

“We see this as a great opportunity to help serve the risk management community and build bridges between the insurance industry and buyers.”, says Mark Wells, CEO of Wells Media Group, Inc. & Publisher of Insurance Journal.

All Insurance Journal readers will receive a special $100 conference registration discount. This promotion is valid through September 22nd, 2017. For more information about the 2017 Risk Management Summit, visit

About eServices Companies
eServices Companies are subsidiary companies of Energi, a leading provider of insurance and risk management services. The specialized platform is focused on providing turn-key risk management, claims, marketing, and technology solutions through its various entities. eServices is comprised of spin-off companies developed under Energi, Inc. These companies include eClaims Management, eRisk Solutions, eMarketing Strategies and eTech Services. eServices was developed to make services, unique to Energi, available to a wider audience and to deliver small and middle market companies with mechanisms to manage exposures, drive down losses and reduce expenses.

Insurance industry must improve whole claims process

Insurers and advisers need to work harder to improve the claims process for policyholders, the life office relationship director for Lifesearch has claimed.

Speaking to FTAdviser, Emma Thomson said the industry needed to do more to “a lot better in terms of promoting what we do as an industry to help thousands of consumers in paying out money to them when tragedy strikes”.

Ms Thomson said not only do people not know the options “open to them” but also that clear claims statistics were important for the end consumer and advisers.

She said: “There are some anomalies between insurance companies and this may affect the data slightly.

“However I believe overall our payout rates are high and even if the methodologies were changed, we would still have very positive statistics to publicise to consumers and intermediaries.

“That said, the Protection Distributor Group, of which Lifesearch is a member, is currently undertaking a survey to establish between insurers where those anomalies may lie.

“The key thing about data, though, is that it’s not just the full picture. We need to do far better in explaining the impact a claim has on claimants, the reasons for the claim and the experience that consumers have once they have to make a claim. The extra services that claims team can provide are really important.”

“It’s the big picture we need to be focusing on in order to gain consumer trust.”

Earlier this year, FTAdviser reported the Association of British Insurers had changed the way in which it reports on income protection claims, a move hailed by advisers and providers as a step in the right direction towards greater clarity.

In a statement, the trade body stated: “We have decided to change how we measure the percentage of claims paid for individual income protection products, so  this now reflects only new claims received during the year that were paid and declined.”

At the time, Andy Milburn, director of proposition and marketing for Holloway Friendly, called the changed basis for IP claims statistics “excellent news” and the “morally correct thing to do”.

He said: “The ABI and protection people involved in this decision have done a good job, but there is still much work to be done on our industries approach to claims and what we do for claimants.”

As a result, FTAdviser reported that several large insurers, including Aviva and Vitality, were pledging to follow the new ABI claims reporting method for 2016-2017 claims statistics.

This change followed a string of calls from various advisers and providers this year, including Holloway Friendly, to not only bring about a greater standardisation over how claims statistics were reported, but also ways to improve service levels and turnaround times for the end client when making a claim.

In April, Andrew Ward, head of protection of advice for Roxburgh, told FTAdviser: “When a policy is underwritten, it is rare that providers will step away from the guidelines and take a human approach to helping someone get cover.

” A claim can be slightly more rigid in terms of meeting certain criteria and getting the claimant to supply certain information.

“I’ve not seen any provider step outside the box and show the client they are trying to make it easier to claim, even if that is the ethos of the provider.”

Ms Thomson also told FTAdviser it was important for the industry to work harder to improve technology to reach more potential customers – particularly millennials.

“The days of door-to-door sales people going round to sell insurance are long gone. We have to adapt to today’s consumers, especially trying to get younger people into the mindset of buying insurance”, she said.

Ms Thomson added “They will be using their mobiles and apps, so it is important we design easy processes for them and perhaps go further and design apps they can use on their phones to buy insurance more quickly, as some countries do.”

This built on a point made earlier in June by Legal & General’s Mark Holweger, who warned that millennials were in severe financial risk by not taking out much-needed protection.

Overall, Ms Thomson was adamant the industry is moving in the right direction, not just in terms of improving technology and the claims experience, but also in service levels overall to the end consumer.