Advisers Favour Standard Trauma Definitions

Our latest poll suggests the majority of advisers support the concept of standardised trauma definitions.

As we go to print, almost exactly two thirds (65%) of advisers have given their nod of approval to the concept of standardising key definitions in trauma insurance products.

Three advisers in ten (31%), however, do not support this concept, while 4% are on the fence at the moment.

The arguments expressed in favour of satandardising trauma definitions relate mostly to clarity and certainty:

“The only way that we as advisers can determine whether we have recommended the correct Trauma policy for a client is at claim time, and whether the policy definition for that specific event matches the severity of the Trauma suffered by the client. That is a very dangerous path we walk.”

“Standardisation would remove many of the issues in the industry. Advisers are generally not medical experts and for an adviser to categorically state that one definition is better than another is fraught…”

This same adviser added that standardisation would also be another reason why churning would be decreased:

“Everyone would know where they stand when it comes to a claim and reduce the negative perceptions of the industry…”

Arguments against the concept mostly relate to competitive advantage issues as well as the principle of how an adviser delivers value:

“While the idea of standardising Trauma definitions sounds great for consumers, I have to agree that it prevents competition between insurers.”

And…

“Difference in policy definitions is precisely why we are advisers. We are supposed to know the differences and advise appropriately.”

Elsewhere, one adviser raised the issue of research house ratings of trauma definitions in challenging the researchers, possibly in collaboration with life company chief medical officers, to deliver a ‘standard’ set of A, B, C and D-rated trauma definitions that are priced accordingly. Interesting idea…

Something needs to give…let’s give standardised terms a go

As we indicated last week, this is not a simple issue. It offers layers of complexity, where the devil can often be in the detail. However, there appears to be the formation of an early consensus where, if trauma definitions were to be standardised, this process would work best where minimum standard definitions are implemented, allowing insurers the competitive opportunity to offer enhanced versions.

Another case for the affirmative has been made by an experienced adviser who contacted riskinfo direct. This adviser argues that standardising trauma definitions means life offices cannot allow their conditions to become or remain ‘outdated’. He suggested this may have avoided one or more of the issues raised in the recent Fairfax/ABC reporting on the CommInsure claims cases.

Minimum standard trauma definitions has been championed as a concept by the risk store’s Sue Laing, who added various responses to adviser comments last week, including this:

“… there is no question that the discussion is only about minimum standards as the outcomes in the UK confirm was the right decision. Go to town on value-adds after that…”

So here is what seems to be a starting point – minimum standard trauma definitions – initially on the main event definitions and gradually incorporating up to twenty of the most common events, which leads us to the comment that best encapsulates the adviser mood in response to this poll:

“Something needs to give…let’s give standardised terms a go ( a minimum base as has been suggested and then let insurers compete on bells and whistles/price).”

Our poll remains open for another week and we hope you will add your voice to this debate…

Editors note:

As noted last week, we asked exactly the same question seven years ago, in March 2009. The industry environment under which we have repeated this poll is quite different from that which existed seven years ago. Interestingly, however, the poll outcomes are almost identical. In 2009, the final results were:

• Yes: 63%
• No: 32%
• Not sure: 5%