Metropolitan OdysseyPlan products first to include standard critical illness definitions

Metropolitan Life is the first insurer in SA to adopt Standard Critical Illness Definitions in the design of a risk product, incorporating them in its recent launch of Odyssey RiskPlan. As a result of varying and complex definitions contained in critical illness products, consumers who generally do not have a technical understanding of medical conditions and definitions have battled to understand the exact extent of their coverage. They have also had difficulty in comparing products and in some worst-case scenarios have tragically discovered that certain conditions were not actually covered.

With policies now incorporating standard definitions and clearer disclosures on what benefits will be paid, policyholders and intermediaries who distribute these products will be more informed as to what their critical illness cover will meet and exactly what would be excluded. According to ASISA, thus far no formal notification has been received from any other company indicating that they’ve adopted the critical illness definitions.

The standardised framework in SA will apply to the four main critical illness conditions – being heart attack, cancer, stroke and Coronary Artery By-pass Graft, which comprise up to 90% of critical conditions, and will operate according to a fully disclosed grid which ranks the severity of these illnesses and the proportionate benefit payout. Each insurance company will determine what the actual payout will be.

Critical illness products first appeared in the SA market in 1983 and over the years, core conditions covered have been expanded and definitions also extended, with the rating of severity levels of illnesses also being introduced. Some conditions covered are not even typical diseases or illnesses – they are rather states of health and surgeries. Even the nature of payouts has changed over time, initially being paid out on very severe events, and now being paid out rather on ‘life-changing’ events.

Various insurance industry participants have been calling for the standardisation and simplification of conditions and exclusions on critical illness insurance products for several years. The SA project which has resulted in these industry definitions has involved several industry participants including the Medical Underwriting Sub-Committee, the Standing Committee on Products, doctors, underwriters, claims assessors, and actuaries. The project was also supported by the Long Term Insurance Ombudsman, National Treasury and the Financial Services Board. ASISA members will be required to implement these standard definitions by no later than 1 September 2009.