Some Points About the Development of Critical Illness Insurance in Canada

The Canadian critical illness market experienced a growth for the creditor critical illness insurance. More precisely, with critical illness cover acting as a protection for mortgage. According to Munich Re, 2000, creditor insurance was launched in the year 1997 and since then a considerable improvement had been noted in the past two years. As a matter of fact, in the year 2000, the premium amounts recorded could have summed up to Canadian Dollar 12 million. This could represent a 100 percent increase in total premium value since the year 1997.

Canadian insurance companies had started to provide cover for a wide range of critical illness conditions. When individual critical illness insurance was initially marketed, companies covered 10 critical illnesses. This helped them compete in the insurance market. Nowadays, most policies may cover up to 15 to 20 critical illness conditions. The group market had been in contrast, with the individual critical illness insurance, followed a different trend. Fewer critical illnesses with less exclusion made the policy. Basically, the creditor critical illness policy covered three major conditions: cancer, heart attack and stroke. Having a simple policy meant easier marketing and presentation. The exclusions may have been less as compared with a policy which covered up to 20 critical illness conditions.

However, there may be certain things to remember related to critical illness insurance in Canada as compared to more successful markets like UK and South Africa. The premium payment rates in Canada offered by association, group or creditor critical illness may be non cancelable for the life of the policy. This can be an advantage for the critical illness policyholder. But from a reinsurer’s point of view, this can be an additional risk as the premium values may be normally high. Furthermore, similar to the early times in the UK, critical illness definitions in Canada had not already been standardised. Competition over the market had made companies to lower their prices and simplify their definitions. From a marketing point of view, this could be a definite advantage. But at the moment a policyholder makes a critical illness claim this could cause a problem. It could even lead to customer dissatisfaction. The reason behind could be that the claims department would find it difficult to understand the softer definitions.

Moreover, insurers had started to realise about how important benefits paid as lump sums are to people. People may also expect to have value added services on top of the claims awarded. As a matter of fact, insurers may be pondering over the idea of offering services along with the critical illness lump sum. Services may include independent specialist or physician intervention. Additional services may also comprise referral to a specialist according to the critical illness claimant’s condition and otherwise if the claimant wishes to undergo treatment abroad, the insurer may help with travel arrangements and payment guarantees.

Critical illness insurance in Canada has not yet reached its maturity. The coming years have been predicted to be rather fruitful for the Canadian insurance market. With people starting to know about critical illness insurance, the policy could sell well if a high profile company comes up with a new and attractive critical illness policy design.