Dr Marius Barnard, the creator of Critical Illness Cover (CIC), believes the UK has the most advanced CIC market in the world, matched by the highest penetration of working age people.
What part has the standardisation of CIC, introduced in 2000 by the Association of British Insurers (ABI) protection committee, played in the UK success story?
Standardisation in the UK has two parts, not only standardising illness definitions, but also standardising the way CIC features in product literature to enable advisers and consumers to compare products more easily.
The common way of describing CIC means that people see the same description over and over again from all companies — so the message really sticks.
Of course, no one insurer acting alone could have done this and the committee has played a key part in getting the right message across and also in making CIC a healthier competitive market.
However, our work in the protection committee goes much further than this.
We aim to tackle the wider industry protection issues, especially the reputation and awareness of protection, including CIC, among consumers, financial planners and the media.
To do this, we have worked hard on getting the support of key influencers.
For example, when we introduced an exclusion for early prostate cancer into the product, the protection committee engaged the UK Prostate Cancer Charity to help ensure that we got the definition wording and messages right.
The charity supported the exclusion as it fits their own message that men can live with early prostate cancer and that more men die with it than from it.
Accordingly, when we announced the changes to the wider world, including the national media, the Prostate Cancer Charity helped us explain what is and isn’t covered and, more importantly, why this is the right approach for consumers. As a result, the change was reported positively.
Similarly, to get the key messages right about how we address the issue of cancer generally and explain what CIC covers, we engaged two well-known UK cancer charities — Cancer Backup and Macmillan.
We were delighted that they helped us prepare consumer research briefs on this, and naturally we shared the full findings with them.
As a result, they supported our work on ‘improving clarity’ and Macmillan came with us to the media briefings when we announced it.
These examples are just two of many, which could never have happened if individual insurers were trying to make the changes themselves. These organisations are unlikely to want to be seen to be promoting a particular insurance company.
Of course, taking the decision to work with charities and independent groups is a two-way relationship.
There is no point in even approaching them if you are not willing to listen to their opinion and compromise to achieve a goal that meets both your objectives.
However, this is a small price to pay to have their support in positioning CIC favourably in the marketplace.
Standardisation has helped give advisers the confidence to recommend CIC as part of mortgage sales. This means that the average CIC sum assured in the UK is high at just below £100,000 ($240,000).
When standardisation was fully implemented in 2000 (some 14 years after the product was first launched in the UK), there were around 500,000 policies in force.
Just six years later in 2006, there were around nine million adults and three million children covered by about six million CIC policies — one in four people of working age.
Could standardisation make a difference in other markets? Yes, I believe so, but it’s important to understand that standardisation is not in itself the whole answer.
However, it can be the platform to help create a healthy competitive market, raise awareness and help win over and keep the confidence of the media, consumers and advisers — all essential ingredients for a successful, thriving market.
Nick Kirwan is market director (protection) for Scottish Widows in Edinburgh and the chairman of the Association of British Insurers protection committee.
