“The insurers also have different tolerances to conditions, so it is often a matter of knowing which battles to fight them on.”
Where the mainstream insurers are not comfortable offering terms to a client, the Lloyd’s market can be worth approaching. But, while it will usually be able to offer cover, this will often come with restrictions.
As well as the mainstream approach of loading the premium, Lloyd’s insurers might impose an exclusion on a policy, ruling out payment for any claims relating to a medical condition. However, the real deal breaker can often be the fact that the maximum term is usually 10 years, which can cause headaches where someone is looking to cover a mortgage.
Although these restrictions make it very much a last resort when arranging cover, Mr Knowles believes the mainstream insurers could learn from the approach. “Insurers should be looking for reasons to insure people, rather than reasons not to insure them,” he says.
“If a client who has had cancer was offered life insurance at £200 a month or the same cover with an exclusion for cancer for £20 a month, I think they would take the cheaper option. The trouble is the insurers worry too much that this could generate bad publicity.”
Regulatory incentive
Taking a more flexible approach to insuring individuals with health issues also sits well with the FCA’s work on vulnerable consumers and access to financial services. Its occasional paper on consumer vulnerability criticised the financial services industry for only having policies in place that were designed for a typical consumer.
Similarly, while its latest work in this area is looking at the provision of travel insurance for consumers who have or have had cancer, it is keen to nurture a more inclusive culture in financial services.
But whether the FCA finds itself having to encourage – or force – insurers to reach out to consumers who have struggled to access cover in the past, the fact that some are already looking at this suggests the protection industry is taking the right first steps.
