Adopting common definitions for all policies can help simplify complex life insurance products, Gen Re says.

“There is a groundswell of opinion in support of requiring the minimum standards industry-wide to comply with the definitions,” Life/Health Account Executive Viviane Murphy said.

“A move to standard definitions is not just window dressing; the serious underlying intention is to reduce the number of trauma claims that are declined.”

A recent Gen Re opinion poll found 69% of senior life professionals favour minimum standardised definitions becoming mandatory.

Ms Murphy says the Financial Services Council (FSC) issued a consultation paper on definitions last year.

“It is hoped this will define the additional steps needed to build consumer confidence, including education about the scope of cover and consistent labelling,” she said.

“Initially, the FSC will address the definitions for the most common causes of claim – cancer, severe heart attack and stroke resulting in permanent impairment.”

Ms Murphy says, once agreed, the new definitions should take effect on July 1, with a commitment to regular reviews that “will ensure definitions reflect evolving medical standards and practice”.

She says it is expected most life insurers will offer trauma definitions that exceed the minimum standard.

“Consumers must have confidence that the product will work as expected, and it is important they trust the integrity of insurers to assess claims fairly. Transparency in the whole process and consistency in product terms helps people to better understand their cover and this includes using consistent labelling and terminology.”