The Association of British Insurers (ABI) proposes an end to the automatic inclusion of a total and permanent disability (TPD) clause in critical illness (CI) policies in a bid to reduce the number of declined claims.
In suggested changes to its Statement of Best Practice for CI Cover, it says TPD should be replaced with a set of "carefully worded" definitions to ensure clarity for consumers about which conditions are, and are not, covered.The ABI analysis of 1,200 past TPD claims shows that almost half were made for musculoskeletal (24%) and mental health (18%) issues. The new list of definitions has been worded to provide clarity about the level of severity such conditions would need to meet to warrant a TPD claim.
Some definitions will be new to the market, such as back and neck conditions requiring specific surgery, while others are already used by insurers but will be standardised by the ABI. Some will be extended to increase the potential for a payout, for example replacing ‘loss of hands/feet’ with ‘loss of a hand or a foot’.
The ABI is also looking at other areas where it believes definitions could be clearer. This will include a discussion around skin cancer exclusions, the distinction between Parkinson’s disease and Parkinsonian syndrome, the definition of some terminal illnesses and wordings around children’s cover.
The following medical conditions are covered under TPD but would be specified;
The first batch are ones where some insurers now provide cover but there is no agreed or standard wording:
- Chronic severe rheumatoid arthritis
- Respiratory failure
The next batch are new ones:
- Complex regional pain syndrome
- Severe Crohn’s disease
- Severe specified mental health conditions
- Specified surgery for severe back and neck conditions
- Permanent loss of the ability to look after yourself
The final two are replacements:
- Loss of a hand or a foot - extended from loss of hands or feet
- Severe brain damage - would replace traumatic head injury