Norwich Union tried to catch out insurance customers

One of the UK’s leading insurance companies, Norwich Union, is targeting customers that hold critical illness insurance policies in order to try and find out whether they have withheld information in the past that could in effect mean that their policies are null and void.

The insurance giant is writing to five thousand critical illness policyholders to try and find out whether they withheld information when they initially took out their critical illness cover.

This is a pilot scheme being trailed by the insurance company, and the policyholders being questioned have been selected at random. However, if the scheme does prove successful then the insurance company is looking to widen the scheme to all two million of its critical illness policyholders. Critical illness cover has already been at the centre of controversy over recent years, as statistics show that around 20% of critical illness claims from customers end up getting rejected due to either incorrect claims on diseases that are no covered, or due to lack of information from the policyholder when the insurance was first taken out.

Critical illness cover is designed to pay out a lump sum to the policyholder in the event that he or she is diagnosed with one of the critical illnesses that are specified on the policy. The policyholder gets to keep the money even in the event that he or she goes on to make a full recovery from the critical illness. However, the level of rejected claims with this sort of cover has resulted in a great deal of negative publicity for critical illness insurance cover.

Norwich Union states that the exercise is to try and update all customer information before any claim needs to be made. One official from the insurance company stated:  ‘We want to be able to clearly advise people . . . how to proceed if they believe they may have missed something off their application form. We feel this is the right approach to try to help customers prevent non-disclosure in the event of a claim.’

Tom Smith
17th September 2007