Call for end to fluffy policy definitions

Sunday, February 19, 2012

An independent financial adviser based in London has signed a petition calling on the UK treasury to see an end to all the “fluffy definitions” that are being used in protection policies, according to a recent report in FT Adviser.

Alan Lakey, who is partner at Highclere Financial Services, has focused on this issue since 2006.

He believes that the use of Activities of Daily Living (ADLs) criteria by insurance companies is wrong, stating that in some ADL policies a person who became blind would not receive a payout due to the fact that he would still be able to carry out three out of six ADL tasks included in the policy.

FT Adviser reports Mr Lakey as saying: "When you have a definition open to interpretation or subjectivity you can find a situation where a company that wants to can easily decline a claim because it doesn't meet the policy definition."
So far only 12 people have signed the petition on the HM Government website. It was started by an anonymous "angry policyholder" who claims to have waited two years to receive a payout.

The petition states: "Income and critical ADL and ADW [Activities of Daily Working] have fluffy definitions that have resulted in the Financial Services Authority, Association of British Insurers and IFAs going on record at their frustrations with these policies yet they are still being sold."

It continues that the definitions include being able to “hold a pen in either hand, read 18 point print,speak and hear all with the use of assistance or aids.” It also points out that 55% of claims that are made against these policies are refused and urges everyone to sign the petition.