Back to Basics Product Design – Poll

Our latest poll asks you to reflect on one of the fundamental issues underpinning sustainable life insurance products – the basic principle of indemnity.

One element contributing to the industry’s sustainability dilemma in recent years involves the surge in mental health-linked TPD claims. This is not the only issue, but it’s a significant one.

Panellists at the Zurich Sustainability Round Table were reminded that industry data reveals a third of TPD claims are now linked to mental health, prompting discussion around the need for insurers to get back to the basics in TPD design (see: Call to Return to Indemnity First Product Principles).

The conversation saw panellists start at the beginning, with comments such as: ‘What are we insuring people for?’, and ‘What is the need that we’re meeting?’ These fundamental questions were tabled by Zurich’s Product Owner, Zurich Propositions, Ioana Logan, who noted that insurance can only be sustainable, affordable, and accessible if it is taken back to first principles – but that subjective conditions such as mental health and chronic pain don’t always align neatly with those principles.

In noting other issues such as the fact that the TPD insured benefit often increases over time while the quantum of required cover often reduces over time, the panel appeared to support the view that basic indemnity principles in product design need to be assessed or reassessed, especially across TPD and IP products. The general consensus was reflected in a comment that the episodic  nature of mental health conditions raises legitimate questions about whether existing product structures remain fit for purpose.

So, where does that leave the sector – and this conversation? Do you support the contention that insurers need to get back to basics – to develop a clearer set of definitions around what TPD insurance is designed to cover? Do you see other solutions that will better address the mental health claims issue in particular? Is the industry over-reacting in this call for a return to the fundamentals of indemnity in product design?

As always, tell us what you think and we’ll come back to you next week…