The FCA recently published feedback on its Call for Input on access to insurance. While this was focused on the ability for people with pre-existing conditions to get travel insurance, it will have wider implications for the protection market – and rightly so.
Too many consumers feel they are uninsurable, having been refused cover, even though another firm may be able to offer terms. The FCA will be working with a range of organisations with an interest in protection, including us, to discuss how the market can increase access.
Some progress has already been made, with certain product and underwriting improvements enabling more applicants to get cover. The Exeter has taken great strides to be more inclusive, launching its Managed Life propositions targeting those with diabetes and high BMIs to help them get more favourable outcomes, and also high-risk conditions that mainstream life providers will not cover. Another example is Royal London with its Diabetes Life Cover.
These advances are to be welcomed, but there is still more to do. The desire to automate underwriting has brought huge benefits but has also meant some clients that do not fit a standard criteria cannot always provide a full picture of their health.
This can often be the case for those with mental health issues, for example, who cannot always tell the full story about their condition and experiences through online questions. Other groups can face more challenges than most, such as those who are HIV positive.
But while our industry should do more to help consumers access cover, we also know the position for those with health issues is better than many believe it to be. There is a perception-versus-reality issue, with people underestimating the number of applicants with health issues who can get cover in place.
To address this lack of awareness, let’s start publishing acceptance rates to show how many applicants are offered terms and on what basis. Even people with depression, hypertension, asthma and many other common illnesses can typically get some form of cover.
Publishing claims statistics has been hugely positive, making our industry more transparent and proving most claims do in fact get paid. It has also helped to raise standards: products and processes have improved to increase claims payouts.
Insurers could publish their acceptance rates in a similar format to claims reporting, split by product line with common/well-known disclosures highlighted. Scottish Widows has recently published a document doing just this, which shows 78 per cent of mental health disclosures result in standard terms being offered life cover, with only 5 per cent being declined.
This openness is a positive move that fits in with the access to insurance work. We hope others will follow, as it feels the next logical step to help increase consumer trust and encourage more people to buy cover.
Emma Thomson is chair of the Protection Distributor’s Group