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Summary Critical Illness insurers are receiving some bad press. This article looks the reasons and comments.
Critical illness Insurance. Insurers under fire
Recent press coverage has again lambasted the insurance industry over critical illness insurance. The underlying problem is that a critical illness claim is not as straightforward as, for example, a claim under car or life insurance. With car insurance ( life insurance quotations ) it's patently clear whether or not you've had an accident - the damage is there to be seen and repaired. And with life insurance it's going to be hard for the insurer to argue that you're not dead! By their very nature, critical illness claims are far more complicated. The insurers will need to satisfy itself that the claim is valid in three primary areas before it pays out: -
It's clearly in the policyholder's interest to check that the medical diagnosis is correct - so there's rarely ever any conflict between the policyholder and the insurance company on that issue. It's the other two areas which require validation where conflicts sometimes arise. With constant research and development in the medical field there can sometimes be some illnesses where validation falls into a grey area - it can be argued that an illness is insured and it can be argued that it isn't. Insurance companies are aware of these problems and they frequently revise the wording on policies in an attempt to clarify the extent ( life assurance ) of the cover and eliminate scope for dispute. Nevertheless, disputes are relatively common and sparks fly when the policyholder thinks he is insured but the insurer disagrees. This is illustrated by a case that comes before the Courts shortly. Mr Hawkins from Staffordshire is suing Scottish Provident under the terms of his £400,000 critical illness policy. Basically, his medical advisers believe his illness is insured whereas Scottish Providents' medical advisers disagree. If Mr Hawkins wins his case, the press will have a field day and the critical illness insurers will suffer further bad press it can ill afford. Another summons, filed recently in the High Court, highlights the problem ( secured loans ) when an insurance company believes that the claimant mislead them on his or her original application form. Our understanding is that if an applicant misleads or leaves out relevant information, this amounts to obtaining insurance cover on false pretences. The High Court summons relates to Thomas Welch from north London who is suing Scottish Provident for £206,800 which includes interest. The problem goes back to 2000 when, a few years after starting his critical illness policy, it was confirmed that Mr Welch had testicular cancer. The insurer refused the claim because of "non-disclosure saying that Mr Welch had not been honest about his smoking habit. He admits that he did smoke earlier in his life but is insistent that he had long since stopped when he applied for the insurance. As such, Mr Welch claims that he did honestly complete the application. We suppose ( mortgages ) that the case will centre upon whether Mr Welch accurately answered the questions about smoking. Most insurance companies define "a smoker" as a person who has smoked or otherwise taken nicotine products within the previous 5 years. If Mr Welch had smoked during those years, he would have had to answer "yes" to that sort of question and his insurance premium would have been as much as 65% more than he would have been charged as a non-smoker. We speculate that his lawyers may argue that either he did not smoke during the period in question or he omitted the smoking information by simple oversight and that his past smoking was not relevant to his testicular cancer. Interesting issues. We shall follow the case and let you know the outcome. |
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