Critical illness insurance payout rise
Critical illness insurance payout up with increased disclosure
Tuesday, 02 Oct 2007 11:51
Critical illness insurance payments increased by 11 per cent over the last two years at Norwich Union, after a campaign to reduce non-disclosure.
Over 2006, 80 per cent of the insurer's critical illness claims were paid and this rose to 86 per cent in the first half of this year.
The rise in pay-outs has been linked to a series of initiatives to drive down non-disclosure of medical conditions on all protection insurance products.
"Non disclosure is a huge concern throughout the insurance industry, which is why we are delighted to see more and more people helping to stamp out the problem.
"Early indications from our pilot have shown an excellent response rate from existing customers providing extra information to ensure they have a valid policy," said Willie Mowatt, director of risk products for Norwich Union.
Initiatives run by Norwich Union to reduce non-disclosure include offering a telephone service staffed by nurses to gather fuller medical information during the application process and allowing 5,000 existing protection policyholders to review their original application forms.
"By taking the time and care that protection applications deserve and providing their insurer with full, accurate medical information, customers can be sure that they have a valid policy which will provide a payment in the event of a legitimate claim," said Mr Mowatt.
He added Norwich Union was now aiming to pay 100 per cent of all critical illness insurance claims.
Last month the Association of British Insurers (ABI) issued new guidelines for the insurance industry for selling protection insurance over the phone or internet.
The ABI guide recommends insurance companies give clear and unambiguous warnings about the consequences of non-disclosure and customers should have a continuing duty to disclose any information that could affect their insurance cover.
Consumers are also told: "You must answer our questions to the best of your knowledge and belief. If your answers change between the time you apply for insurance and the time your policy starts you must tell us.
"If you do not tell us, we might not pay."