Critical Illness industry failing to gain consumer trust

Opportunities to improve reputation not taken, says Defaqto

Progress in the past year by the critical illness industry to regain consumer trust has been undermined by bad claims publicity, ill-judged press reports and unhelpful comments from the Ombudsman, according to Defaqto, the financial research company.

The industry had been expected to capitalise on the implementation of the ABI's statement of best practice but, in the event not all insurers did so, leaving many advisers, and in turn their clients, inadequately informed about critical illness.

While the increase in the numbers of ABI model wording will bring clarity and consistency to the market, the guidelines no longer differentiate between core and additional conditions, leaving the consumer unsure of the value of conditions offered.

This in turn has done nothing to reduce the "condition inflation" that has affected the industry in recent years and which can be seen as a marketing ploy of questionable value to the customer.

Author of the report and Defaqto's Principal Consultant - Protection, Nick Telfer commented "The future for critical illness hinges on rebuilding customer trust and developing products to meet the modern consumer's needs.

I am concerned that neither the product development needed nor the education necessary to rebuild trust in the product is happening nearly quickly enough.

This will inevitably lead to people being potentially left wide-open to the consequences of serious illness".

Defaqto believes that lack of education is at the root of the problems and that the industry needs to come together to promote a positive image Telfer continues, "the evidence from providers published statistics is that the vast majority of claims are paid and this is the message the industry needs to get across.

We believe that rather than providers doing this individually, they need to work together through an industry sponsored campaign to promote the proposition to the consumer.

The report examines all the issues currently facing insurers and provides insights how these can be dealt with as well as including a detailed analysis of the products themselves.

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