A series of benchmark definitions for critical illness (CI) will change advisors‚ attitudes toward selling CI insurance, according to the company leading the push for change.

The definitions were officially launched yesterday and introduced by reinsurer Munich Re Canada today at the World CI Conference in Toronto.

The vast majority of advisors do not have critical illness insurance on their product radar at the moment and the fact that illness is defined differently within the policies is often blamed.

“Those differences are there enough so that some of the advisors really decided to stay away from the product until they are more comfortable with the definitions,” Hélène Michaud, director of marketing at Munich Re, told the conference this morning. “So we listened hard, took a look at it and decided to do something about it.”

And the result was a year-long working group with 6 of the major insurers, representing 80% of the market in Canada. The goal was to hash out a set of definitions for everything from the thickness of a malignant melanoma to a definition of blindness. The process began in March 2007 and in February of this year a document was distributed for companies to consider.

Michaud said the aim of the new definitions is to get advisors on board and interested in selling CI insurance. Currently only about 20% of advisors are selling the stuff in Canada, she said, and only 6% of the market has been tapped. “We see a huge opportunity,” she added.

The initiative brought together underwriters, medical specialists and others from the insurance field, but Michaud noted that actuaries were consciously left out of the process to ensure focus remained on definitions and didn’t veer into pricing issues. When it came down to it, Michaud told the audience, the differences in definitions were not terribly significant.

There are currently 26 definitions covered under critical illness and this benchmarking plan looked at each and every one of them. The bulk of the changes were related to wording and consistency, according to Michaud. “We don‚t expect you to be medical experts and to have to explain those differences to your clients.” The idea is that advisors should be able to compare the product offerings, rather than having to compare and contrast varying definitions within them.

“We decided to use the word benchmark and not standardization, since the intent is not to standardize the product,” she said. The goal was to find definitions that would be “clear, concise and easy to understand for both advisor and consumer.”

So, for example, until now skin cancer was defined differently by various policies. An advisor could look at one plan in which melanoma is defined as a lesion of 1.0 mm, while another policy would only require the lesion be 0.75 mm. Too often, these miniscule differences proved too frustrating for advisors. The new definitions include a common definition.

The benchmarking initiative, however, is voluntary. Companies are in no way required to get on board and so can decide both if and when they will adopt the definitions.

“We want to make sure that companies have a choice,” said Michaud. “What we can tell you though, is that so far the response has been very positive and we can expect several companies to adopt in the near future.”

She noted that a transition period will be necessary in order for companies to develop implementation systems. “You can expect, over the weeks and months to come to see more companies converting to those benchmark definitions.”

Michaud emphasized that the initiative was not an attempt to liberalize definitions or to standardize CI products, only to develop some consistency so advisors feel more comfortable selling the products to their clients.

“The reality is that the majority of advisors are not even talking about CI,” said Michaud. “And they owe it to their clients to really start promoting the product.”