Claim statistics are used in a number of ways by different parties across the industry. They can tell us not only the number of claims paid but also what they were paid for and therefore help build both adviser and consumer confidence. Most insurers will have a team of people that regularly review the claims they receive to understand where they might not have paid claims in order to improve their policy wordings. Aviva are one example of an insurer that is constantly reviewing such data and the improvements they have announced today regarding their Extra Care Cover are a case in point.

Extra Care Cover is an optional benefit that can be added to Aviva’s critical illness cover and will pay an additional £50,000 to the life assured if they suffer from a specific critical illness that either has, or results in long lasting detriment. It is designed to provide an extra cash injection for those clients whose lives will be severely affected due to a long-lasting illness to help provide for changes that may need to be made to their home or even additional care.

Up until now Aviva included four different scenarios a client could claim under. The new update sees changes to three of these, with one remaining the same. Below we detail the changes that have been made.

Scenario #1

Within the previous wording, to qualify for the extra care benefit a client was required to meet the critical illness definition for either dementia, motor neurone disease or Parkinson’s disease (including Parkinson’s Plus syndromes if the client had upgraded CI) before the age of 50.

Within their new wording two changes have been made to this scenario:

1.       Aviva have added four additional conditions to this list: Kidney failure, liver failure, respiratory failure and (where upgraded CI is selected) heart failure. Based on their previous two years claims experience this would result in an additional 33 claims being paid.

2.       The maximum age before which a client can claim has also been extended to 55, which including the above conditions would result in an additional 64 claims being paid based on the previous two years claims experience.

Overall, and again based on Aviva’s last two years claims experience, this could result in approximately 2.8 times more claims being paid for this one scenario.

Aviva however, are not the only insurer that offer an increased payment if a client is diagnosed with a condition before a certain age. LV=, Old Mutual Wealth, Vitality (if Booster is included) and Zurich (Critical Illness Select) also offer similar benefits. The table below highlights the conditions that each insurer would pay an additional amount for if the client claims before a certain age.

*LV= have additional wordings for Multiple System Atrophy and Progressive Supranuclear Palsy, however the other insurers would cover this under their Parkinson’s Plus Syndrome definitions.

Across these insurers, the additional amount they will pay differs and below we have highlighted the variations:

Perhaps most important for advisers is the age before which a client is required to have claimed in order to receive the additional payment. The conditions that qualify for the extra payment will all have higher incidence the older a client is, and therefore the older the limit placed by the insurer means that they are likely to pay more claims. Below we have highlighted the incidence at different ages for four conditions covered by Aviva, LV=, Old Mutual Wealth and Zurich along with the maximum age at which a client is able to qualify for the additional payment. This highlights that by extending their maximum age to under 55, Aviva are likely to pay more claims than other insurers under this benefit for these conditions.

Scenario #2

Aviva’s second scenario within which clients are able to claim under Extra Care Cover remains unchanged and will pay the additional £50,000 if a client is unable to perform three of the six standard Activities of Daily Living (ADLs). Whilst Old Mutual Wealth offer the same scenario, Vitality take a slightly different stance. Under the conditions listed that qualify for an additional payment there are an extra 21 conditions where Vitality will pay an additional amount if as a result of the condition the client is unable to carry out four of six functional activity tests.  Unlike Aviva and Old Mutual Wealth who put no age limit on qualifying under this scenario, Vitality still require the client to be diagnosed below the age 64.

Scenario #3 and #4

In the previous wordings, Aviva provided two further scenarios where a client could receive an additional payment of £50,000. The first was if, within a year of a critical illness or total permanent disability claim, the client deteriorated to a point where they are suffering from either locked in syndrome, permanent vegetative or minimally conscious state. The second scenario would be paid on the first anniversary of a successful claim if the client is suffering from permanent severe heart failure or failing at least three of the six ADLs. Old Mutual Wealth currently offer the same scenarios.

Aviva’s new wording looks to amalgamate the two scenarios into one and will now pay the additional benefit of £50,000 if within a year of a successful critical illness or total permanent disability claim the client is unable to perform three of the six ADLs. Whilst this is generally positive as clients that would have had to wait until the first anniversary of a claim to receive payment will now receive payment when they meet the criteria, it also has one drawback.

In the old scenario #4 Aviva would pay a claim if the client suffered from permanent severe heart failure which requires a client to meet the New York Heart Association classification of 4. This denotes that a patient has heart failure symptoms at rest, however only the most severe cases will be unable to carry out three or more ADLs. Due to this, although relatively few, there may be some cases where a client would have been able to claim under the old wording but not the new.

Overall the changes made by Aviva are extremely positive and it highlights that they are constantly reviewing their claims data to find areas of their proposition where more claims can be paid to those that really need it. Whilst Aviva are the only insurer that charge an additional premium for cover, they also offer it to an older age and enable the client to claim if their condition deteriorates significantly (regardless of the condition claimed for) in the year after the claim.