ABI Announces New Rules On Payouts For Critical Illness Insurance
11 January 2008 / by Verity G
Customers claiming on their critical illness insurance, income protection and life insurance policies are set to benefit from pioneering new rules which state that insurance companies will now pay out where medical information has not been disclosed, providing the customer has not deliberately withheld it.
The announcement, made by the ABI on behalf of its members, will mean a fall in the number of disputed or refused claims and follows a series of recent shake-ups, such as changes to application forms and improved communications between insurance firms and claimants, which have already contributed to a fall in the number of dismissed claims.
Commenting on the changes, Stephen Haddrill, Director General of the ABI, said:
“Customers want to know that their insurance claim will always be assessed fairly and paid without fuss. The industry wants customers to be able to take out insurance with confidence. Today insurers have signed up to ensuring both of these happen. The number of protection claims that are turned down will fall.”
In the event of a customer failing to provide relevant medical information, insurers will pay out a fair sum which will be reflective of the risk and the premiums already paid. However, under the new rules, full premium refunds will be given if the insurer decides that the policy would not have been taken on had they known the full facts, but it is thought this is likely to be for a very small number of exceptional cases.
Louise Cuming, Head of Protection at moneysupermarket.com, comments:
“This announcement – coupled with the Financial Services Authority’s new Insurance Conduct of Business Sourcebook (ICOBS), which aims to improve selling practices for protection products – will have a profound, positive effect on the protection industry. Britain is an underinsured nation, so improving customer confidence and helping them understand policies is very important.”
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