The level of complaints relating to private medical insurance is rising. Edward Murray unlocks the secrets behind ensuring customers are better educated about what they are buying, thus minimising causes for dissatisfaction
How many complaints is too many? Certainly it is difficult to know without having an idea of what has prompted them or how they have been treated, and so any figures on complaints require closer investigation.
According to the Financial Ombudsman Service, there were 337 private medical insurance complaints made during the 2004/2005 year. Last year, this figure had risen to 389 - not a huge leap in terms of numbers but nonetheless a jump of more than 15%.
Given that more than 110,000 insurance complaints were made in each of the years concerned, it is clear that volume complaints are not the norm in the PMI market. However, when the withdrawal of insurance could see the end of care for a terminally ill policyholder, there can be no mistaking the importance of getting things right.
Looking at the type of claims that are being made, the FOS said more than 75% of private medical health insurance claims related to policy terms and conditions. Concerns were raised at the exclusion of claims because the insurer deemed a condition to be chronic and, therefore, no longer covered under the policy; and at the application of exclusions for experimental or unproven treatment.
Elsewhere, the limitation of benefits for a policyholder not using a designated hospital and the exclusion of treatment for cosmetic treatment also featured highly. Other significant areas of complaint included poor administration, such as delays in authorising treatment or meeting claims and non-disclosure by the policyholder. In looking at the type of complaints that are being received, the crux of the matter seems to be one of communication.
Alistair Sclare, head of healthcare at Groupama Healthcare, believes communication is key to getting things right and ensuring that where problems exist they can be eliminated in the future. He is also quick to point out that it is important to look at policyholders as two different groups: those buying cover for themselves, and those that are given cover through a third party such as an employer.
Where individuals are buying cover for themselves, Mr Sclare believes they are more inclined to look into the policy more fully and research exactly what it is they are buying. For those receiving cover as part of a benefit package and not having to make payments themselves he feels there is perhaps a tendency simply to think that cover is in place, without getting a true understanding of the breadth of the cover or its limitations.
He states: "People often assume they have cover in place. It is all about better management of expectation." It is not necessarily about making changes to the policies themselves but ensuring the cover they provide is telegraphed effectively to the policyholders to ensure they do not feel mislead in any way. To this end he states: "We have a case management service where nurses are involved in all cases that are likely to lead to any form of difficulty in that respect."
By maintaining contact with the policyholder and the medical teams involved, he adds it is easier to ensure everyone knows where they stand and, if cover does have to be withdrawn, as much warning as possible is given and, where possible, alternative arrangements are made for continuing treatment.
As the PMI market has developed, the number of policies available and the different levels of cover that are provided have increased dramatically. While this creates better choice for consumers and allows them to construct the cover they feel will be both effective and affordable, it also creates problems because of the exclusions that are in place.
Dr Natalie-Jane MacDonald, medical director for Bupa Insurance, believes individuals have to be wary about what is being offered to them, and accept that the cheaper policies in the market will not provide the same level of cover as the more expensive ones.
She explains: "Something that is £100 a month is not going to be the same as something that is £500 a month - it is just not possible. It is a complicated sale and it requires a lot of information at the point of sale and some effort on behalf of the customer too."
There is no doubt that regulation has helped by putting an onus on the right sort of information being available to potential policyholders. Rama Sankaran, director of strategic development for Healthsure, says: "Even though we have a small number of complaints, it is important to realise why they are happening and to be able to learn from them. The communication is improving and the legislation that came in with the Financial Services Authority is making sure the communication through to policyholders is getting better."
Ben Faulkner, spokesman at Axa PPP Healthcare, agrees: "We work hard to make customers aware of the scope of their policies from the outset; for example, through our pre-sale key facts leaflet and follow-up membership material."
As customers are now more aware of the route to complain if a problem arises, it is not surprising that complaints are on the rise. However, as long as insurers continue to work towards ensuring consumers know exactly what they are buying into, and work continues to improve the efforts made by consumers to understand the products they themselves are taking on, the PMI market should manage to avoid the volume complaints that other insurances lines have seen.
Given the low level of complaints being made, it should also be possible to examine them fully and in learning from them eradicate problems in the future.
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