Munich Re, Canada (Life)

Critical Illness Insurance Education Guides

May 31, 2024

Critical Illness (CI) insurance has been sold in Canada for over 30 years and is an integral component of Canadian living benefit products. In contrast to life insurance, CI is a complex product with contract language that can appear daunting. Over time, the CI contract has become more complex, presenting problems for both consumers and advisors. In December 2021, the Quebec-based regulator AMF (Autorité des marchés financiers) issued a report challenging the industry to address the perceived shortcomings of the CI insurance product.  Areas of concern described in the AMF report included: 

  • Incomplete understanding of CI insurance by consumers. Marketing materials should not result in confusion for consumers or an incorrect understanding of what the product covers. For example, it should not appear to consumers that the insurance is broader than described. Nor should it suggest that consumers require more insurance than they need.
  • Complex terminology. CI insurance contracts use complex medical and insurance terms that consumers may not understand, and these may not be fully explained at the time of purchase. 
  • Claims denials. Many CI claims are denied. According to the AMF report, over 60% of denials are related to limitations or exclusions, pre-existing conditions, not meeting a definition, and survival and waiting periods. It is imperative that consumers understand the possible reasons for denial so that they can make informed decisions about the suitability of CI insurance. 
  • Lack of post-purchase support and educational materials. Insureds should receive post-purchase assistance and communications to ensure they understand their rights and obligations. Carriers should improve the claims, complaint examination, and dispute resolution processes. 
  • Distribution support. Distribution channels should be supplied with information and support to help them advise their clients appropriately.

CLHIA: Response: Education Guides

Members of the Canadian Life and Health Insurance Association (CLHIA) met to discuss how the industry could address the AMF’s criticisms and support member companies developing their own responses to the AMF report.

A new CLHIA sub-committee, the Consumer Education and Advisor Education Publication Committee, was formed in November 2022. The committee was chaired by Kerin Moreton, Munich Re’s VP of Claims for North America, and included 12 volunteer representatives from six large and medium companies domiciled in Quebec and the rest of Canada (ROC), three reinsurers and the CLHIA. Members’ roles ranged from actuaries, product managers, marketing, underwriting, and claims.

The Committee’s goals were to create consumer-friendly guidance documents and to assist advisors with resources. Documents were developed using the following objectives and guiding principles:

  1. Encourage insurance carriers and advisors to include educational information on all the products where CI is offered.
  2. Create a glossary of insurance terminology with plain-language definitions for terms that industry practitioners take for granted, such as ‘reinstatement,’ ‘paramedical,’ ‘lapse,’ ‘underwriting,’ etc.
  3. Use language that is easily understood.
  4. Be aware that these educational tools will be publicly available and perhaps be discussed with doctors.

The Committee prepared two sets of guidelines, one to help CI consumers evaluate the product's suitability for their needs and one to help CLHIA insurance members and advisors understand the CI insurance product and the purchasing process. The guidelines were approved by the CLHIA and the AMF and launched on February 22, 2024. We encourage our clients to share links to these guidelines with new purchasers of CI insurance and incorporate the information provided into their own client-facing materials. Please visit our website to access the French and English versions of both documents Critical Illness Insurance Education Guides (munichre.com) and feel free to contact us with any questions about this and any other Munich Re CI initiatives: 

Kerin Moreton, ALHC, FLMI, ACS, AIAA / Vice President, Claims / [email protected]

Dr. Tim Meagher MD, FRCPC, FACP / Vice President & Medical Director /  [email protected]

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