Insurers and cash plan providers are innovating in response to the pandemic, says AFM's Martin Shaw
Insurers always say the key moment of truth in an insurance contract is the time when the customer makes a claim. But, as a healthcare insurer, how do you support customers who can't claim as well as demonstrate the value of the policy amid the most acute health crisis in living memory?
That is the challenge health insurers have faced in 2020. Private hospitals have been given over to support the NHS, trips to the optician or dentist were cancelled and general healthcare was halted. With most health plans being taken out as corporate arrangements, the (temporary) closing of businesses and the furloughing of staff has increased the risk of employers cancelling healthcare arrangements to reduce costs.
There is also the irony that healthcare providers have had record low volumes of claims in the middle of a health pandemic. Some of this will be caught up, but by no means all.
healthcare providers will have to continue taking a flexible approach for some time to come
So, what have health insurers been doing to navigate these challenges? Rather than making cancellations difficult or sitting back and running the risk of high volumes of lapses, I've been struck by the variety of methods insurers are adopting to generate new value for policyholders. Among the member-owned organisations I work with, this includes developing new features that offer extra care and support for customers, such as mental wellbeing apps and online GP services. We've also seen organisations make financial commitments to pass on any unintended profits to customers and offer additional contributions to community healthcare initiatives and local charities.
Some cash plan providers have waived pandemic exclusions on hospitalisation cover, and some PMI providers are offering enhanced cashback to customers who obtain NHS treatment without charge where private treatment is unavailable. By using inclusive approaches to providing cover for self-isolation and imaginative ways of seeking evidence for claims, providers have reduced the burden on customers and lessened their anxiety levels.
As recent experience shows, easing out of lockdown is not easy and pockets of Covid cases are flaring up at alarming levels in parts of the country. This invariably means that healthcare providers will have to continue taking a flexible approach for some time to come. It also increases the inevitability that the current ‘exceptional' conditions become normalised, and that the pattern of healthcare needs is changing for the long term.
In an AFM survey, healthcare providers paid out on more than 97% of claims received in 2019 and paid 98% of claims within five days. The pandemic has shown that the moments of truth in a healthcare product are not just about the claim but are about the ways you help keep people healthy and the imaginative approaches you use to support them against the stresses and anxieties in everyday life. They're also about giving them the resilience to face the future, whatever it may bring.
Martin Shaw is Chief Executive at the Association of Financial Mutuals (AFM)