“It took a while to get producers interested in selling critical illness insurance,” said David J. Pavletich here at the first annual meeting of the National Association of Critical Illness Insurance, Washington, D.C.
Pavletich is president and CEO of Colorado Bankers Life Insurance Company, a Greenwood Village, Colo., insurer that has issued over 48,000 CI policiesover 26,000 in the worksite and nearly 22,000 through brokered sales and other channels. The company entered the CI market in July 1998 but didnt see strong growth until more recent years.
Pavletich was among several speakers at NACII to address issues related to developing CI insurance as a product line.
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This is an evolving product right now, and the industry is “going through the growing pains,” noted Bob Greving, executive vice president and chief financial officer of UNUMProvident Corporation, Chattanooga, Tenn. He urged the industry to deal with various issues cropping up as the line develops.
For example, CI insurance still has the stigma attached to it of being cancer insurance, he said. Therefore, the industry needs “to make sure we take a high marketing position and maintain integrity in how we promote the product.”
One way to do that is to present the product as a means of providing financial support to clients, not financial reward and speculation, Greving said. That is especially important at higher face amounts, he indicated.
(Note: Most CI executives at the meeting said they are targeting most sales at the $5,000 to $50,000 face amount range. Larger sales do occur, but they are not typical.)
Another concern: “I am hearing that the duration from time of issue to claim is relatively short,” said Greving. This raises the possibility that some carriers might be open to anti-selection, he indicated. “This has to stop if the product is to develop.”
The definitions of covered illnesses that appear in the products also need work, he said. They need to be clear, he said, “so that what the consumer expects and what the consumer gets are consistent.”
Even the definition of “heart attack” is not standardized, agreed Daniel Pisetsky, managing director of US Living Benefits, LLC, Manchester, Conn. “We need to get this (approach to definitions) right, so we can be sure consumers are getting what they are supposed to get.”
The definitions must be such that they cover what the pricing is meant to cover, stressed Jeanie Perruzza, reinsurance director-underwriting for Sun Life Reinsurance, Toronto. The criteria required to meet the definitions should be clear, too, she added.
The industry also needs clarity on taxation of the premiums and policy benefits, said Pisetsky.