ABI seeks to improve TPD clarity

The Association of British Insurers (ABI) today 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 proposals follow concerns about the number of CI policies declined under the TPD clause. Although TPD accounts for only 3% of CI claims, the ABI says, more than half (55%) are turned down.

The ABI says it also wants to introduce a new model definition for ‘Loss of the physical ability to look after yourself' by introducing six new rules, three of which must be met by a claimant.

"We are confident the new set of definitions provide clarity and a better understanding about what makes a valid claim," ABI assistant director, health and protection, Nick Kirwan says.

"It is vital that consumers, insurers and other interested parties make their voices heard."

TPD is a condition now covered by most CI policies but, as it has no model definition, each insurer uses its own definition to assess whether someone has become totally and permanently disabled.

The ABI says a particular intention of its proposals is also to make a clearer distinction between CI and income protection (IP) policies, by removing definitions from CI based on occupation.

Bernie Hickman, protection managing director at Legal & General, says: "I hope this means customers will have a better understanding of CI insurance and leads to fewer declined claims."

The full document can be seen here. Responses should be sent to Karen Evans, protection policy adviser, by 30 September: Association of British Insurers, 51 Gresham Street, London EC2V 7HQ health@abi.org.uk