Medical Definitions Influence Advisers’ Choice of Insurer

The early results of our latest poll suggests advisers are more likely to consider recommending products from an insurer which updates its medical definitions on a more frequent basis.

At the time of going to press, 70 per cent of advisers who have responded to our poll have indicated that the frequency of the updates of medical definitions from a life insurer will influence their choice of product provider. Around a fifth of respondents indicated it would make no difference, while 8 per cent are unsure.

It is a question advisers may not have had to wrestle with in the past as a number of life insurers only introduced regular, formal definitions review process in 2016, or in some cases last year, according to information presented to Banking Royal Commission (see: Major Insurers Lacked Definition Review Processes).

Life insurers who are members of the FSC are required to have formal definition review processes in place as part of their adherence to the Life Insurance Code of Practice, and need to review them every three years.

This issue could be taken off the table by the introduction of standard definitions, which are used in some other life insurance markets, as well as their automatic application to all policies issued by an insurer. At present, that conversation has not taken off in the Australian life insurance market.

In the meantime, our poll remains open for another week as we encourage you to make your voice heard, as well as letting us know your thoughts on the use of medical definitions and the relatively recent adoption of formal review processes.