Industry expert Kevin Carr and covermagazine.co.uk back calls for insurers to move to own occupation definitions
Whilst investigating activities of daily living and work tasks, specifically their use in income protection (IP) policies, it seemed from trade articles we found dating back prior our claim the industry was split. It is clear that list-based definitions for IP policies don’t work, but even though many questioned their use and validity insurers kept making them available for sale and some advisers (like mine) were happy to sell them to consumers.
During our ScotProvSaysNo Twitter and Angry Policyholder campaign we were very fortunate to come across Mr Kevin Carr of the Protection Review. Kevin who described our fight for a payout against Scottish Provident as a high-profile case helped support our calls for these work task definitions to be scrapped. With the Financial Ombudsman Service finally overturning a decision to decline our claim and a recent article in The Times by Laura Whateley about our case, Kevin has joined forces with covermagazine.co.uk where he is a regular columnist to put the issue to the front.
Kevin told covermagazine.co.uk “Mr Hargreaves case has highlighted an issue many within the industry know already exists, which is that such policies are arguably unfit for purpose.”
“We have seen the removal of ‘any’ occupation, which was challenged in court to mean the inability to carry out any one occupation as opposed to one of thousands, and we could see a similar pattern of development with other definitions.”
“Last year, The Protection Review survey, which included views from a range of insurers, reinsurers and intermediaries, asked whether or not the industry should seek to address the on-going problems with ADL & ADW based definitions for IP policies? The results were staggering, with more than 80% of respondents calling for change.”
Roy McLoughlin of Master Adviser, who also sits on the Income Protection Task Force, told covermagazine.co.uk: “IP sits at the head seat of the protection insurance table because it is the claim that statistically is most likely to happen compared to critical illness cover and life insurance. It is therefore important that all genuine claims are paid quickly so that consumers have complete trust when taking out such an important policy. But sometimes, the most suitable policies are not available on a direct basis, which is where advisers can add real value.”
Kevin, along with various trade publications including the FTAdviser.com are now helping to keep the ADL debate in the news and we hope that this combined effort by industry experts and publications will result in UK insurers seeing sense and moving away from task based definitions.
It won’t be an easy task as there will be a concern that by moving to the superior own occupation definition will price consumers out of the market if the cheap task based policies are removed from sale. I would argue the industry needs to find a way as task based policies don’t work and when they only damage the protection industry when these policies refuse to payout.