Insurance

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August 21, 2005 Insurers plot ways to spurn cancer and stroke victims

CANCER and stroke sufferers who have taken out critical-illness insurance could be denied a payout under a new insurance industry plan. The Association of British Insurers (ABI) suggested on Friday that the definitions for stroke and cancer used to determine payouts could be tightened to make it more difficult for claims to succeed. About 12m adults and children are covered by a critical- illness policy. The schemes usually pay out a lump sum if claimants are diagnosed with one of a list of illnesses or conditions, including cancer, heart attack and stroke. But if the ABI’s proposals are adopted, simply being diagnosed might not be enough to trigger a payout. The current definition of a stroke says that a policyholder has to suffer an “incident resulting in permanent neurological damage”. The proposed replacement would require a policyholder to display “persisting clinical symptoms of permanent neurological deficit”. A policyholder who has suffered a stroke might have to show signs of speech impairment or paralysis of the body before he or she could successfully claim. Under the proposals insurers will be able to restrict the cancer level of cover to more advanced, life-threatening cases. This would mean that policyholders with, for example, early-stage breast cancer would be unable to claim. Alternatively, insurers could offer staged payments whereby policyholders would get a proportion of their entitlement when the cancer is diagnosed and the rest only if the disease spreads. The ABI argues that tighter definitions, which would apply only to new policies, are essential following a surge in claims in recent years. Medical advances mean that some forms of illness can be detected earlier and patients can make a quick recovery. Arguably this makes those ailments less critical. Many insurers have already tightened their definition of prostate cancer and will pay out only when the disease is in its advanced stages. The ABI warned that critical-illness cover could become unaffordable if policies were not slanted in favour of insurers. So policyholders will have to take on more risk. Nick Kirwan, chairman of the ABI’s critical-illness working party, said: “These proposals will help ensure that the type of cover continues to be available at an affordable price.” But Macmillan Cancer Relief said: “This is yet another blow for cancer patients. It makes you wonder what the point is of taking out critical-illness cover in the first place.”