Health insurers have issued a warning to intermediaries that advice practices must change, particularly around front-loaded commission and member medical history disclosure.
The statements were included in Health & Protection’s latest Individual Private Medical Insurance Report with data showing sharp rises in the number of claims made and proportion declined.
On a like-for-like basis, claims made to insurers increased by 11% in 2022, but the proportion declined rose by 25% from the previous year.
Pre-existing conditions and ineligible conditions were the top reasons for declining claims among all the insurers who submitted their data.
‘Elephant in the room’
Responding anonymously to questions from Health & Protection, insurers referenced the Consumer Duty and highlighted their concerns around switching practices and potentially poor outcomes for clients when claiming.
“The industry continues to ignore the elephant in the room – Consumer Duty versus a hugely front-loaded commission structure that simply cannot represent fair value and encourages the movement of business from one insurer to another, repeating the same issue,” one provider said.
“Providers and intermediaries need to get better at communicating the implications of a moratorium and pre-existing conditions, in order to help customers be more informed and in control of their cover.
“Cases of declined claims are increasing and there is a predominance with regard to pre-existing [conditions].
“As the market hardens and more groups seek to move providers for cost reasons, there will be a further need for proper transparency on switch disclosures and claims histories,” it added.
Other insurers made similar comments.
The full results and market analysis can be found in the Health & Protection Individual PMI Report which is available for all advisers, intermediaries and brokers to download for free from this link or by clicking on the front cover below.
