The Office of Fair Trading (OFT) believes the health insurance industry is dragging its feet over co...
The Office of Fair Trading (OFT) believes the health insurance industry is dragging its feet over concerns raised in its two health insurance reports.
While it welcomed the industry's steps to improve comparability of products through core benefit tables, the regulator said it still had "serious concerns" over the sale of moratorium-based policies and was disappointed that the industry had not responded to its recommendation of publishing historic premium increases.
At present, PMI insurers have to give customers the choice of either a moratorium or a fully underwritten contract. But the OFT is concerned that customers do not fully understand what is and is not covered in a moratorium policy and believes those that do might forego seeking treatment for two years in a bid to be covered under their PMI contract.
Louise Zucchi, media relations manager at Norwich Union Healthcare (NUH), said: "The OFT does not seem to have recognised our successful efforts in improving customer communications and has made no mention of the industry's buyers guide to PMI."
The report proposed insurers publish their average premium increases over the last five years.
But Zucchi said: "We oppose this and believe it could be misleading to consumers. First, we cannot take historic trends as an indication of future increases and, second, premium increases are subject to age-related increases and annual increases.
"On top of this a provider may have a budget policy with no outpatient treatment and a fully comprehensive policy covering everything from pregnancy to dental cover. If you add up the average of these two premiums you would not end up with a realistic figure. This move could do more harm than good."
NUH claims it has gone to great lengths to ensure customers appreciate the implications of buying a moratorium policy. It now only sells moratorium policies through intermediaries and over the telephone as this allows it to take more control over a sale.
Robin Payne, business development manager at Exeter Healthcare, said that customers should have a choice between the two methods.
He said: "When the facts are properly presented to the individual they are capable of informed judgement." But he added that some insurers are not playing fairly.
"Some are short-circuiting the system by only sending applicants a moratorium form and asking them to request a full medical declaration if they would rather be fully underwritten. They are pushing the moratorium route and this is wrong."
Stephen Walker, proprietor of PMI intermediary, Medical Insurance Services, believes the OFT has a right to be concerned about moratorium sales.
"I would usually recommend full underwriting as the customer knows where they stand from day one and if there are exclusions they know what they are. While insurers insist that they explain moratorium policies, I find that people do not understand them."
