While awareness and engagement can help to address the protection gap, for people with medical conditions or disabilities, obstacles to protection can come at the underwriting stage.
In a bid to support applicants and improve transparency, a cross-industry commitment to explain underwriting decisions when an insurer offers non-standard terms, or is unable to offer cover, came into effect in December.
According to the non-statutory agreement, it aims to ensure that people with pre-existing conditions and other potentially vulnerable customers are “appropriately supported throughout the application process, as well as increasing their trust that underwriting decisions about them are being made fairly.
“It also aims to enable customers to navigate the insurance market more confidently and effectively and ultimately to find affordable and appropriate cover.”
The need for transparency
More people are likely to accept the terms they are offered if they better understand why a provider has reached a particular underwriting decision, says Duncan Mosely, chief operating officer at Guardian.
One of the details in the agreement is that if a customer provides explicit written consent, the insurer “should discuss, in detail, the reasons for the underwriting decision with the distributor. This may include information that the distributor was not aware of when submitting the application”.
Naomi Greatorex, director at Heath Protection Solutions, says that as a specialist advice business, she discusses medical history in detail with clients.
“However when information comes back from a GP report or medical that we did not detail on the application, it feels like the adviser is shut out.
“I think not sharing the new medical information with the adviser causes delays to clients getting cover, and means that advisers struggle to give their clients the best solution on what the next steps should be.”
How have insurers implemented the agreement?
Among the details of the agreement are that insurers will broadly explain what underwriting is and why it takes place, and if requested by a customer, explain what information was used to make the decision and why.
For some insurers, the agreement enhanced and formalised existing practices.
Scottish Widows says providing transparency in decisions when non-standard terms are offered has always been part of its underwriting process.
“Our work with the Access to Insurance Working Group, and the subsequent principles agreed on transparency of underwriting decisions, resulted in us enhancing this process further to support the agreed key principles,” the provider adds.
Clive Morris, chief medical underwriter at MetLife UK, also describes the agreement as an extension of the provider’s current practices.
“[It] encourages us to go further for our clients when providing transparency and support, as well as constant empathy and understanding of their situation.”
And Vitality says that no significant changes to its processes or new training were necessary: “We have always adhered to the agreement’s principles, even prior to becoming a signatory.”
Moving away from technical jargon
