Advisor support: The key to critical illness sales

Charles Tremblay, Assistant Vice President of Claims and Litigation at Munich Re, believes that advisor training and client education will be the best defense against the high denial rates highlighted by the Autorité des marchés financiers in its Critical Illness Insurance Supervisory Report, published in December 2021 (see the September issue of Insurance Journal). 

According to Tremblay, the denial rate is inflated by claims that could have been avoided if the insured had properly understood the definitions of diseases covered by the product. For instance, denials due to limitations or exclusions accounted for 23% of all denials, ranking first, followed by denials for non-compliance with the definition at 17%. "Should denials for causes not covered, like fractures or depression, be included in the denial rate when they are not covered claims?" he questions. 

"It's a matter of education. Remove these claims, and the denial rate will drop," adds Tremblay, who oversees the claims department at the reinsurer's Montreal office. He notes that the education committee of the Canadian life and health insurance association (CLHIA) is exploring ways to better train advisors. 

Sales deterrent 

Tremblay also believes that the product's complexity deters advisors. "Advisors are concerned about the product's complexity. They are hesitant to sell it. They struggle to understand medical definitions and to determine what is covered and what is not," he observes. 

For example, the CLHIA's updated 2018 definition of cancer involves multiple stages of the disease, some of which are excluded. Among other things, a lesion described as benign, non-invasive, pre-malignant, with low or uncertain malignant potential, borderline, carcinoma in situ, or tumor classified as stage Tis or Ta will be excluded (stages defined by the American Joint Committee on Cancer). A malignant melanoma of the skin measuring 1.0 mm or less in thickness will also be excluded, unless it is ulcerated or accompanied by nodal or distant metastases, according to the CLHIA's reference definition. 

Some cancers excluded from full insurance coverage will be recognized for partial coverage, which can vary from 10% to 25% of the total coverage amount, depending on the product and insurer considered. 

Understanding at point of sale 

"What the advisor can do is ensure that the consumer fully understands the product at the time of purchase. We don't want the individual to have a mistaken idea of the extent of their coverage," emphasizes Brian Loewen, Vice President of Non-Participating Insurance Solutions at Canada Life. 

Loewen notes that the product is designed to cover diseases that can have significant financial consequences for an afflicted insured. He adds that insurers strive to rigorously price this risk to keep the product's price as low as possible. "It helps a lot when advisors do upfront pricing in the field, gathering as much information as possible about the client and their medical history," he explains. 

Canada Life is among the insurers that have recently updated the information they offer to advisors and their clients regarding critical illness insurance. The insurer did not make any changes to its product last year, says Loewen. 

As a support to advisors, Loewen mentions the digital application they can use to underwrite critical illness insurance and inform their client. "Once the policy is in force, insureds can consult their contract information on our My Canada Life website," illustrates Loewen. The digital claim form can be signed with DocuSign's electronic signature, and all medical evidence can be submitted electronically. "However, the client may need to scan the claim forms after they have been signed by a physician," adds Loewen. 

Much more than definitions 

Insurers have no choice but to stand out. There are 18 providers in the individual critical illness insurance market, according to tables prepared by InsuranceINTEL, a Canadian insurance product comparison website. 

They offer a wide variety of premium features and coverage options, as evidenced by the comparison table below. Most insurers offer both term products (T10, T20, etc.) and level premium products for a limited period, most often designated by the acronym T75 for term up to 75 years. 

Humania Insurance stands out by offering four different critical illness insurance products, while competitors offer only one. These are 5575 (named after the product platform with which Humania targets insureds aged 55 to 75); Temporary Critical Illness Insurance; No Medical Exam Insurance - CI, and Prodigy. This strategy allows them to cover a range of premiums and coverage options. 

In group critical illness insurance, 12 insurers offer their product in Canada. With several providers, the employer can choose to make their group critical illness insurance guarantee mandatory for all employees or optional. 

Insurers' offerings are accessible even to very small groups. Manulife stands out in this regard, offering the guarantee to groups of 2 employees and more. Its competitors offer it to a minimum of 3 employees, sometimes more. Most insurers extend coverage to the employee's spouse and children.