Norwich Union has announced that it has already changed its policy on claims after the guidelines published recently by the industry’s umbrella body. The numerous refusals from insurers to pay out on policies after it came to light that customers had not provided all of the required details when they set up the policy.

Until now if someone had forgotten to include a fact on an application would run the risk of being refused a future critical illness, income protection or life payout, this would remain the case even if the missing details had nothing to do with the claim in question.

In what the Association of British Insurers (ABI) has termed a “pioneering” commitment, it has pledged that its members will pay out more claims, even if some medical information has not been included in the original policy, unless that information has been deliberately withheld.

According to the ABI, insurers will pay out “a fair sum, reflecting risk and premiums paid.” In the case that the insurer has taken on a policy unaware of all the necessary facts, the premium would be refunded.

Stephen Haddrill, ABI director said: “Customers want to know that their claim will always be assessed fairly and paid without fuss. The industry wants more customers to be able to take out with confidence. Insurers have signed up to ensuring both of these happen. The number of protection claims that are down will fall.”

Norwich Union conducted a study during which they asked 5000 of their customers to review the original policy application document and inform the insurer of an inaccuracies.

The intention of the trial was to amend any mistakes which could potentially invalidate any future claims. 236b customers added further information to their policy, 33 of which were significant with the potential to affect underwriting decisions.

Norwich Union’s director of protection, Willie Mowatt, said: “We have been heavily involved with creating these new ABI guidelines and we wholeheartedly support any such initiative which can provide fairer treatment to all of our customers.
"Non-disclosure has been an industry-wide problem for some time now, so

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the latest ABI guidelines are a great step forward to help tackle the issue.We were also very impressed with the response we received through our pilot exercise. Nearly 600 recipients replied in total, which shows that consumers are taking the issue of non-disclosure seriously.

"We believe that a combination of action already taken at the application stage to ensure that the need for disclosure is well understood and the new ABI guidelines will go a long way to reduce the number of claims which are declined as a result of this."

Mowatt went on to make the serious-ness of omitting information clear, saying: However, Mr Mowatt added: "The only way people can be sure of receiving a full payment in the event of a valid claim is to fully disclose at the outset of their policy.

"This way, customers can have greater peace of mind in the event that they need to make a claim. We would always advise people that if they feel they may have missed something off their application, it is better to inform their insurer to make sure their policy is valid than to risk receiving a partial payment or a rejected claim at a later date."

These changes are sure to mean more people are willing to take out life policies, keeping the life leads industry buoyant. The new ABI guidelines are proving popular with analysts, the commitment to pay out more frequently on policies is sure to entice more customers into buying insurance.