Outcome-based insurance cover is likely to become more common in the critical illness sector in lieu of condition names, according to an industry expert.

Alan Lakey, director at comparison service CIExpert, predicted the industry will see more insurers remove condition names in 2021 in favour of outcome-based cover that encompasses multiple claim triggers.

Mr Lakey said: “The logic of incorporating conditions which have similar or identical claim triggers is irrefutable and will be welcomed by consumers and advisers alike.”

He added: “The ultimate winners will be those capable of explaining the concept in a simple and concise manner.”

In October AIG Life said it had ‘checked out’ of the “conditions race” as it simplified its critical illness cover.

The provider consolidated some conditions under four categories: degenerative neurological disorder; reduced heart function; surgery to the heart, aorta or pulmonary artery; and surgery via the skull.

It grouped more than 20 conditions focussing on specific surgeries or the impact on daily life for customers, rather than the name of the illness.

Mr Lakey described the changes as one of the “biggest” in the sector and said they had repositioned the provider at the “forefront of the quality stakes”.

Katya MacLean, chief executive officer at Guardian, said she hoped to see more providers exit the ‘conditions race’.

She said: “Recently we’ve seen other providers say they are moving towards quality and ‘checking out’ of the conditions race. This move, and the way it is changing the debate, can only be a good thing for clients. I hope to see more of this in the future as it is so important for creating trust.

“The next phase of this is to continue to convince advisers, particularly those who are efficiently using what they know, that the concept of value has to replace price as the main comparison.”

Ms MacLean also said it was “encouraging” that the industry had broadly accepted the importance of quality and the likelihood of a payout when comparing policies.

On Guardian’s critical illness protection product its website states the provider’s focus is on providing the “best” possible cover for the most common illnesses, and that it “never” applies general exclusions.

It reads: “We aim to make our definitions clearer and more all-encompassing than the rest of the market. And, in many cases, we don’t ask for detailed medical evidence – the word of a UK Consultant is all we need to pay out.”

Ms MacLean also said clients’ willingness to talk about protection provided advisers more scope to explain the differences in product quality.

She added: “Value is replacing price as the main comparison and providers are continuing to develop products which better meet client needs.”

Naomi Greatorex, director at Heath Protection Solutions, said where providers offer a choice of ‘basic’ and more comprehensive insurance contracts, this aided a conversation with clients about cost and quality of cover.

She added: “The choices here help highlight to consumers that there are options based on cost vs value.

“There are concerns over monthly insurance costs by some clients in the current climate, and to have options so more people can afford some cover is important.”


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