Three ways to look at the latest trauma products
The idea of making a payment proportionate to the impact of a condition or disease is not new. In fact, ‘severity-based’ is really another term for ‘principle of indemnity.’
Indemnity means we should put the client back in the situation – financially – that they were in before the loss. When insuring cars, houses, and boats that’s always been easy to do. When insuring lives and people it has always been trickier.
Trauma started off with a limited set of trauma events, each very serious, and a lump sum payment. Competition ensured that the contracts would cover more and more conditions, with more generous wordings.
Advances in medicine meant earlier diagnosis, improvements in treatment, better survival rates, and more chance of a faster return to a normal life. We arrived at a situation where some clients could achieve very high sum insured payments for something that could have had no great impact on lifestyle or income.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
