The Financial Services Council has released draft minimum standard trauma definitions as part of the official launch of its Life Insurance Code of Practice today.
The three main trauma definitions of heart attack, stroke and cancer have had standard definitions drafted, according to the FSC, ‘…as a possible solution to recent market issues.’ The Council has stressed that these are suggestions only and they have yet to secure industry agreement.
In its release, the FSC has documented four objectives in seeking to adopt minimum standard medical definitions for these three key trauma events. They are:
- To provide standard definitions that all life insurers who are bound by the Life Insurance Code of Practice must meet as a minimum when assessing critical illness/trauma claims for the three major medical conditions that make up the majority of claims
- To ensure that the standard definitions reflect current medical tests and practices
- To educate consumers in understanding what their critical illness or trauma policy covers and improve consumer confidence in their critical illness/trauma policy
- To provide consistent labelling across products to assist with comparisons and consumer understanding
The notes attaching to the draft definitions point out the difference between clinical and insurance definitions of these three events, where the insurance definition generally takes into account the severity of the condition and the impact of relevant treatment, as this is likely to reflect the recovery time and financial impact of the condition.
FSC CEO, Sally Loane, said that after the consultation period, during which time the FSC will be seeking the input of external medical specialists, the definitions will be submitted to the Australian Competition and Consumer Commission for approval.
The target date for the introduction of these minimum standard definitions has been set for policies purchased on or after 1 July 2017, where the terminology life companies include in their product disclosure statements when using the minimum standard definitions must be described as:
- Cancer – excluding early stage cancers
- Severe heart attack – measured by specific tests
- Stroke – resulting in permanent impairment
The FSC notes these definitions are minimum standards that would apply to the three conditions and that life companies are free to offer additional cover by including other conditions or definitions that pay out on less severe conditions than contained in the standard definitions, and that any additional benefit over the minimum standard must be clearly described in the product disclosure documents.
Click here to access the FSC’s draft minimum standard medical definitions for heart attack, stroke and cancer.
Why is it that it has taken the FSC all this time to acknowledge this issue. Advisers have been steering clients away from these “inferior products’ for years (where possible) to look after the clients best interests. If the two year Clawback is retained for the Hybrid model under the proposed LIF Legislation, there will be an inability for the Adviser to make sure their client can achieve the most favourable claims outcome. Will the FSC and the Government indemnify the Adviser for non payment of a claim in the event that the Adviser is sued for NOT BEING ABLE TO LOOK AFTER THE CLIENT’S BEST INTEREST DUE TO CONSTRAINTS IMPOSED BY LEGISLATION.
If we are guenuinely interested in the clients best interests why would the draft Trauma definitions not be based on the best definitions in the marketplace and not mediocre ones. Is it possible (pardon my sinisysm) that the FSC are looking after the best interests of the Direct Insurers?
It’s very gratifying, after introducing this industry initiative as achieved in the UK, over 8 years ago at our first adviser conference, plus over 8 years of quiet and not-so-quiet lobbying since by the risk store, to see this concept at last in some sort of official industry document, even if no-one knew it was coming.
Thanks riskinfo for bringing it to our attention and for tracking down the link, as we could not find this on the FSC website without your link. If the FSC want submissions, they had better get the document visible quick smart. Not a good start.
More commentary to come from the risk store yet…not sure we are convinced this has been a well thought out launch…
So it might be brickbats AND bouquets for this first step by the FSC.
We note this afternoon that the full link is now up on the home page. Perhaps the media release was a tad premature.
We also note that a ridiculously short consultation period of one month has been set down. This is insulting to the many busy people who should be given more time to make meaningful commentary and fit this into work schedules. It is a brand new operational, policy, marketing and PR initiative (despite being debated for some time) and deserves considered input so that we all get this right first time.
We would also like to know the extent and nature of the medical consultation taken to get to this point. In the UK this was a very long, engaged and transparent process and it should be no less here. The imprimatur of the medical profession is the key to ‘selling’ the benefits of the standardising philosophy in practice, to the consuming public. Has the FSC engaged with and consulted the Heart Foundation; the Cancer Council, the Stroke Foundation? We don’t know. We should know and we should be apprised of the processes undertaken to reach these definitions – whether OUR opinion of the wordings is good or otherwise.
Further to Sue’s comments in the past I have sought the opinions of cardiologists re heart attack definitions and have found their opinions most helpful, particularly when driving a stake the heart (pun intended) of the definitions of many online trauma policies. Cheers Thommo
Why Standard Definitions and not Minimum Definitions?
The heading in the draft document released for public discussion states “MINIMUM STANDARD MEDICAL DEFINITIONS”
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