Insurers need to get more creative in designing income protection (IP) cover for people who have suffered cancer or heart disease, according to Royal London.
The insurer told the Income Protection Taskforce’s Income Protection Awareness Week that it did not think the insurance industry was flexible enough in creating cover for certain groups that needed it.
Craig Paterson, chief underwriter at insurer Royal London, explained insurers faced a tricky balance to ensure they charged an accurate price for the number of claims they expected, prevent the product being unaffordable, and provide a solution customers could claim on.
Paterson revealed he is often asked whether an exclusion can be applied instead of rejecting a prospective customer’s application for cover but noted this can be challenging.
“You know a customer that’s had cancer or a heart attack, they will often be absent for work for a variety of different reasons,” Paterson (pictured) said.
“If we get that wrong and it impacts the number of claims we receive we have to put up prices for everyone, so it’s a tricky balance to strike, but my view would be that we’ve not struck that balance yet.
“I think insurers, and I would include Royal London in this, have to get more creative in the space and looking at customers more individually is certainly a way to do that.
“Diabetes in the past was a no for IP. Now we’re in the position where with more minor instances of it, particularly type 2, a customer will get cover, so that is an example of moving in the right direction but there is more to do.
“I absolutely believe that customers who have heart disease, who have had cancer, that insurers have to have the wherewithal to come up with a way to offer some of these customers cover.”