World Cancer Day – Time for Insurers to Make a Difference
It is World Cancer Day on 4 February 2014 and a good time to reflect on how the insurance industry can better serve those who have been affected by a cancer diagnosis.
Based on mortality and cancer statistics released by the Office for National Statistics for England and Wales in 2011, Gen Re estimates that one in ten men and one in seven women now aged 20 will be diagnosed with cancer during their working life. A comparison with 2001 data suggests that the chances of a cancer diagnosis in this age range have increased by 30% for men and by 14% for women. Almost all of this increase is down to more cancer diagnosis rather than improved survival to older ages.
The probability of a cancer diagnosis in this age range is similar to the probability of death from any cause for men. Women are twice as likely to be diagnosed with cancer than they are to die of any cause before age 65. This suggests that most cancer patients go on to survive into retirement age.
The “Cancer’s hidden price tag” report produced by MacMillan Cancer Support in 2013 revealed that four in five people living with cancer incur additional costs each month at an average of GBP570. These expenses include transportation, additional heating and help around the home. The report demonstrated that the heaviest financial burden arises from being too unwell to work with no suitable source of income replacement in place.
Department for Work and Pensions data shows that one in twelve people successfully claim Employment Support Allowance because they have cancer. Gen Re’s data shows that one in six Income Protection claims are cancer-related. Those who started claiming after a 1-month deferred period on an IP policy typically continued to receive payments for another nine months, compared with between three and four months for other claim causes. One in three died while in claim. Most claimants went on to recover from cancer.
ABI statistics at December 2012 showed that there were 1.3m individual Income Protection policies in force and that 1.8m people have IP cover as part of a group scheme. A lump sum payment from a Critical Illness policy can be used to replace income or meet additional expenses following a cancer diagnosis. There were 300,000 individual standalone Critical Illness policies and a similar number of members covered under a CI group scheme. We estimate that there may be a further 4m accelerated CI policies in force.
There are currently around 30 million people in employment in the UK which means that millions of working people do not have cover in place to alleviate the financial strain that a cancer diagnosis brings. The insurance industry can make a positive contribution by finding creative ways to improve customer engagement so that more people have cover that pays what it promises when they need it most.
It may be time to end the CI definitions race and to develop new products that better meet the public’s need for varying levels of income as they live and survive through their cancer diagnosis. An even better focus may be a product that meets the needs of income replacement and additional expenses but reduces the need for underwriting and simplifies the sales process to allow the product to be efficiently sold to those who need it.