A debate in the UK about whether or not to share claims statistics for short-term income protection has brought to the surface the conflicting views the industry has of short-term income protection.
The UK has created a much more positive environment into which to sell income protection by developing and reporting on standardised claims statistics. Consumers see headlines now which show "XYZ company pays out 92% of Income Protection Claims". That builds confidence. Concerns over definitions has kept the shared statistics for short-term IP out of the process. This statement sum up some of the industry concerns nicely:
“Should short-term IP be defined as a proper IP plan, running to retirement age but with a limited claim period, or is it glorified accident sickness and unemployment cover?" Kevin Carr said, quoted in Money Marketing by Tessa Norman. Link.
That underlines the industry attitude that nothing must be done to undermine the position of "proper" income protection, which is a contract that runs to retirement. What it doesn't do is help the 80% of consumers without income cover get some cover, rather than none.
Interestingly, several sellers of short-term IP are not worried. They think that the headline message of "claims are paid" is adequately met by the current statistics, and more detail could be confusing. That keeps the focus on the consumer objective - to build confidence.