The well-known anchorman of Sky Sports ‘Soccer Saturday’ has been plotting his 10 walking marathons in 10 days to raise awareness of Prostate Cancer. But, what really IS “Unbelievable Jeff” is that sales of Critical Illness (CI) policies – to help clients cope with the onset of all serious or critical illness – have stayed virtually flat over the last FIFTEEN years.
Source: Munich Re Group presentation, February 2016
Given the increasing awareness of health issues in general, one could well ask why this is the case, and many commentators and experts in the field have tried to assess the reasons. Clearly we are even more aware now (compared to when CI policies were conceived in the late ‘60s in South Africa and later adopted by the UK in the ‘80s) of the impact of critical illnesses on our lives - if not only from the barrage of stats that Providers throw at us on a regular basis.
With advances in modern medicine pushing the boundaries of life expectancy further, it is inevitable that the incidences of critical illnesses will rise. CI was a clear concept in the 1980s; it originally covered just 4 conditions - cancer, heart attack, stroke and coronary artery by-pass graft (CABG). Next, end stage renal failure, paralysis/paraplegia and multiple sclerosis (MS) were swiftly added, shortly followed by total permanent disability. Since then insurers have added multiple conditions and partial payments to try to stand out from their competitors and be all inclusive for the consumer. It is possible that this has created too complex an environment where advisers may understandably struggle to understand products.
"So how does the industry reverse years of increasing complexity and create a product that truly meets the needs of consumers?"
One answer could be for insurers to consider realigning the features of the product with its name and focus on the truly critical conditions that have a fundamental impact on consumers’ lives. Some say that the industry is currently locked into a vicious circle of competing on the number of conditions which require lengthy policy wordings of a medical and consumer “unfriendly” nature, making sales of the product more difficult.
Providers could focus on five core conditions such as cancer, heart attack, stroke, MS and CABG. These account for over 80% of claims and generally are the ones that keep consumers awake at night.
Source: Munich Re Group presentation, February 2016
Taking this a step further, full payment of the sum assured could be based on only the most critical types of some of these conditions to retain the true purpose of the product.
Some insurers are already looking to partial payouts or severity based claims to help counter this “all or nothing” approach but at the same time recognising the importance of not underestimating the impact, both physically and mentally, of having conditions such as a heart attack or cancer of any severity. They still have a significant impact on the life of the consumer and it might take some time for them to recover and return to normal activities such as work.
However, from Munich Re’s initial analysis, a purely critical illness product might potentially be provided for around 25% less than the current product, depending upon definition, and although past reductions in retail rates have not stimulated sales to date, a significantly cheaper proposition will always be welcomed.
To some, this type of proposal may seem radical but to change years of industry behaviour would require a fundamental change. Encouragingly, there is a strong undercurrent within the protection industry at present showing increasing support for change. Recent positive signs have included insurers removing redundant conditions from their CI products because they add no value to the consumer, e.g. removing Alzheimer’s disease because it is already covered under dementia. Some Providers have already taken up the challenges of focussing more on the needs of the consumer by offering greater insight, which in turn helps the broker to recommend the product to clients. At this point in time it may be more academic or just small steps, but with enough commitment from a few brave Providers, perhaps real change will start.
Royal London have recently added to their suite of client friendly information to focus on helping brokers produce quality material to support their recommendations. Their tailored marketing solutions allow brokers to access a complete suite of material that can be branded to the individual firms. These range from traditional sales aids, to a selection of data capture forms to help consumers realise their financial exposure post illness. Moreover by simply entering a few details about clients a comprehensive tailored report can be generated, which is full of compelling calculations and statistics – click here to view an example.
Legal & General have also been active in support of brokers, e.g. by developing tools to support advisers to better understand illnesses and definitions, and further aid them in discussions with clients. They’ve made a number of enhancements to the interactive tool, AnatoME so brokers can find even more information about each of their CI definitions. They have also added more useful facts about each illness, and an explanation of how their own ABI+ illnesses exceed ABI cover.
AnatoME can be used as a quality educational tool to increase knowledge of CI definitions, as brokers can also use this tool during the sales process to help customers understand which critical illnesses are covered. You may also find this tool useful.
Linking to the Jeff Stelling theme, there’s information about their Low Grade Prostate Cancer definition, providing cover for cancer of the prostate which has been treated but is not advanced enough for it to be covered by their Cancer definition. Cancer cells are graded in accordance to how alike they are to normal cells. Cancer cells that look very similar to normal cells will be classified as low grade and tend to grow slowly. Conversely, cancer cells that look unlike normal cells will be high grade, which are more aggressive. This is additional cover provided with their CI Cover plans, which pays out up to £25K. With 40,000 diagnosed yearly this is the most common type of cancer for UK males.
It is not only in the area of CI that Providers are upping their game in support of brokers looking to recommend or sell more protection. The Exeter recently launched an online Forecast Calculator to help advisers engage their clients in IP. They believe that too many people in the UK are walking a financial tightrope, with only 1 in 10 protecting their incomes from illness or injury.
The Exeter’s new tool calculates the shortfall they would face if they had to rely solely on sick pay from the Government, helping brokers establish the need for this crucial form of cover. They provide the solution with a range of three quality IP plans for three different audiences. In addition, they have made some product enhancements to simplify the claims process and ensure that clients are getting value for money, especially those with fluctuating incomes.
Their Pure Protection plan has always been the benchmark plan for high-risk occupations. For some clients, keeping premiums to a minimum is top priority and by adding a new 2 year claim option they have been able to significantly reduce costs.
Plus, to help people with fluctuating incomes they have added a new “benefit fix” allowing clients to fix a proportion of their benefit (up to a 50% proportion of their gross income) with their application, or within 12 months of their policy starting. The result is a guaranteed level of benefit and a quicker, more stress free claim process.Finally, they’ve increased the maximum finishing age, from 68 to 70 – to reflect longer working lives and give clients the chance to keep cover right through to a later retirement age.
In addition to the Protection Providers developing processes to aid the promotion of Critical Illness, iPipeline, the owner of the Assureweb Portal has recently added a tool to help brokers develop a bespoke budget solution for clients called Solution Builder. This tool helps to establish a range of Protection benefits for a client based on a clear budget and various benefits can be “mixed and matched” until that budget is achieved using a unique “slider” system to achieve the client aim.
Paradigm Protect members can have a free one month trial of the tool and receive a monthly discount on the software. For more details, click here.
So between Jeff Stelling, the Protection industry and the software houses a tremendous amount of work is being done to raise the awareness Cancer itself, and the need for Critical Illness and/or Income Protection to help clients through the inevitable difficulties this can cause – we can only hope that this has a positive effect on future CI sales and finally after 15 years the trend will move to be a positive one moving forwards.
As ever whatever we can do at Paradigm Protect to support you, please let us know. You can visit www.paradigmprotect.co.uk where you can also find Provider specific information. Alternatively you can call Mike Allison on 07775 690340, email firstname.lastname@example.org or call the office on 0121 781 7337.