Critical illness – Why sell a sensitive product, and risk losing the brand value through use of insensitive processes?

Critical illness insurance wasn’t conceived in the back rooms of an insurance company, it was created by Dr Marius Barnard a South African doctor who along with his elder brother Christiaan performed the first human-to-human heart transplant.  Witnessing the financial plight of some of his patients who had a critical illness Marius realised there was a need for a new type of insurance – one that paid out on the diagnosis of illness such as cancer, heart attack and stroke. He shared this vision with Crusader Life (a South African insurance company) which then went on to develop the first critical illness policy.

In an interview with Scottish Widows, Dr Marius Barnard explained how he realised that there was a need for a new type of insurance:

“As a doctor, I diagnose and treat patients and as I went through medicine over the question of twenty/thirty years, I saw tremendous changes. Not only the medical need but also in the financial needs of our patients. “

“The case that really triggered my ideas was a young divorcee, 34, with two young children. The X-rays and biopsy confirmed the diagnosis of lung cancer and we removed a lump. She went home five days later and three weeks later she was back at work. Two years approximately after the operation, she came to me at my consulting rooms, basically dying on her feet. Pale, exhausted, loss of weight, skin and bone, gasping for breath, and I examined her and it was pretty obvious that she was now in the terminal stages of cancer. “

“Why should she come to my rooms? She can hardly walk, I can see her. She said ‘Doctor, I’ve come from work’. Now why was she at work? She needed the money. She needed money to provide for her children and herself, rent food, education. She died a few weeks later and when she was buried the life insurance policy paid out. Wouldn’t it have been better for her to have the money when we diagnosed cancer? That poor little girl had to work until basically she was dead. “………

…….”You see it’s really a marriage between medicine and insurance. I always say we, as doctors, are the ‘physical doctors’, the protection insurance is the ‘financial doctors’. “

“If you are ill, the first person you’ll go to, if you have a heart attack, will be your ‘physical doctor’ but I hope at that stage you’ve already made provisions so that your financial health is in place. So when your physical goes you have financial protection to provide you with that money which is the promise of insurance and the definition of insurance to give you money when you need it most.”

Unfortunately Dr Marius Barnard is no longer with us, but his pioneering work in establishing critical illness as a mainstream product for many insurance companies means that according to the ABI (Association of British Insurers) in 2014:

• 92% of Critical Illness claims were paid (up from 80% in 2005).
• 14,401 Critical Illness claims were paid.
• The average Critical Illness payment was £67,039.
• A total of £965 million was paid in Critical Illness payments.
• The main reasons for claims were cancer, heart attack, stroke and multiple sclerosis.

These figures are impressive but arguably there is room for improvement as 8% of critical illness claims are still rejected with two of the most common reasons claims are declined are that they don’t meet the definitions covered by the policy and/or that the policyholder allegedly didn’t tell the insurer about a previous medical problem.

In 2013, Aviva asked customers about their understanding of critical illness cover. It found 45% thought it would cover any critical illness, not just those listed under the plan

The trend to include “severity-based” cover (where plans pay out a proportion of the sum assured, depending on the severity of the diagnosis, and continue to provide cover for the more serious conditions) highlights the need to quickly capture accurate claims information, whilst being aware of the stress and anxiety that a policyholder is undoubtedly experiencing is vital to the insurer, the advisor and of course to the policyholder and their family.

HCB’s (Health Claims Bureau) expertise in the management and assessment of  claims  throughout the life & pension market can assist insurers and advisors when dealing with critical illness claims.

We have developed a fully integrated critical illness claims management support service specifically for Insurers and/or Advisors, that can:

• Accelerate the ability to make a claims decision, often turning weeks into days;
• Remove the need for the claimant to complete a claim form at all;
• Offer empathetic support to claimants, including signposting of relevant charity and support groups, as well as advising on eligibility and detail of appropriate State Benefit entitlement;
• Identify non-disclosure through observations, discussion around medical history and careful direct questioning, for example on smoking history or alcohol consumption.
• Enhance insurer and/or advisor brand by delivering a quick and reliable service, achieving proven high levels of customer satisfaction.

For more information click here for a copy of our Critical Illness Claims service or contact us

Health Claims Bureau, Harwell Innovation Centre, Building 173, Curie Avenue, Harwell, Didcot, Oxfordshire OX11 0QG

01235 519924

enquiries@hcbgroup.co.uk

Why sell a sensitive product, and risk losing the brand value through use of insensitive processes?

Sources:

Critical illness insurance: The neglected cover that could be crucial – The Guardian (December 2013)

Protection Claims Data 2014 – Association of British Insurers (August 2015)

Statement of Best Practice: Critical Illness Cover – Association of British Insurers (December 2014)

Technical notes: Critical Illness Insurance – Financial Ombudsman Service

Insurance Hall of Fame – Dr Marius Barnard

Marius Barnard Movie – Scottish Widows