Johannesburg — THE Life Offices' Association (LOA) has finalised a standard disclosure grid that will indicate to policyholders when their critical illness products will pay out.

This will eliminate confusion when one insurer defines a critical illness in one manner and another has a different definition of what constitutes paying out in the event of a claim for a similar critical illness. The four major critical conditions covered by dread disease insurance are heart attacks, strokes, cancer and coronary artery bypass grafts.

Also, there are four tiers of severities for each of the four core diseases, so in total there are sixteen standard definitions that each insurer will have to implement.

"The definitions are certainly much clearer and are there as best practice, they are not mandatory," said Paul Lewis, chief actuary at Gen Re.

"The insurance companies do not have to use these definitions but they are forced to use the four by four grid to say how much they will pay for which disease."

Although the disclosures will be standardised, the percentage pay-out for each of the definitions will be left entirely up to each insurance company.

This will assist policyholders to understand critical illness products and better compare the benefits offered by different life companies.

Lewis also said the definitions were not retrospective and the start date would have to be confirmed with the insurer.

Speaking at an LOA risk insurance forum, Lewis, said the disclosure grid had taken about 18 months to finalise.

The association set up the s tandardised c ritical i llness d efinitions p roject committee to formulate the standard industry disclosures.

Lewis said the implementation date would have to be held back until the LOA had the opportunity to engage with stakeholders including the Financial Services Board, the t reasury and the Competition Commission.

He said that implementation is likely to occur in the middle of next year.