The UK’s private medical insurance (PMI) sector is already highly regulated – meaning it ‘does not do things on its own,’ while greater regulation of the sector would not be welcomed by anyone, advisers have told Health & Protection.
However, they have suggested greater transparency, particularly around medical inflation costs and reasoning for rises.
Their responses followed yesterday’s Health & Protection exclusive where Baroness Natalie Bennett called for tighter regulation of the sector, saying it appeared private medical insurance was not being properly regulated and she feared industry practices were harming patients.
She highlighted this was particularly important as more people were taking-up medical insurance given pressures on the NHS and warned companies “will not do the right thing on their own”.
Baroness Bennett has quizzed the government in the Lords over several key issues involving regulators and called for tighter oversight of the industry along with better access to care for patients.
But Baroness Bennett’s call has not gone down well with advisers.
Already a highly regulated sector
Marcia Reid, non-executive director at Sherwood Healthcare, went as far to tell the peer that it would be helpful if she had a better understanding of how health insurance worked in the UK before she makes such sweeping judgements.
“I am disappointed that she believes medical insurers ‘will not do the right thing on their own’ and would like to draw her attention to two key points,” Reid continued.
Reid rejected the idea that the industry is doing things on their own, adding it is “already, and quite rightly, a highly regulated sector”.
“But perhaps more importantly, from my experience as both a patient and an adviser, I believe that our medical insurers really do provide an excellent service with the very best of intentions,” Reid pointed out.
“I also believe that the majority of advisers put the interests of their members and clients first and act as effective and committed gatekeepers, nurturing strong tripartite relationships for the benefit of the people they advise,” she added.
“I agree with the government’s rejection of Baroness Bennett’s request for the Care Quality Commission (CQC) to be given responsibility for overseeing medical insurers – they have enough on their plate already.”
FCA does a good job
Mike Hesch, head of UK employee benefits at Engage Health Group, maintained that the Financial Conduct Authority (FCA) already does a good job at regulating the industry, with clear rules and guidelines that ensure customers are treated fairly.
“From a broker point of view the FCA have clearly set out that the clients demands and needs should be documented, and any recommendation given is based on those requirements,” Hesch said.
“Those broker firms that are found not to do this face hefty fines and loss of reputation,” Hesch continued.
“Our industry is relatively small and prides itself on the high standards of service and advice and therefore the loss of reputation is almost more costly than any fine.
“I also believe that having two regulators will just cause confusion, which could then have a negative effect on customers.”
Limitations to cover
Hesch further pointed out that there are and have always been limitations on the cover private medical insurers can offer.
“Being an insurance product, all insurers have detailed terms and conditions that clearly go into great detail on what is and what is not covered,” Hesch added.
“Brokers like us add an extra layer of protection to the customer, as it is our job to let customers know any particular limitations of each provider and offer independent advice and recommendations, again based on the clients demands and needs,” Hesch continued.
Though Hesch clarified that like any insurance it is also the responsibility for the consumer to ensure they have read and understood the policy terms and conditions and any limitations of the cover, or to ask further questions to clarify anything they do not fully understand.
“Our industry is constantly evolving; there are numerous different products that will offer a virtual GP’s service and diagnostic cover that can help to bypass some of the areas of the NHS that have the biggest delays, these can be very affordable and therefore clients are not forced to opt into higher cost private medical if they choose not to,” Hesch concluded.
Simply inaccurate
Kristian Breeze, director of healthcare at Ascend Broking Group, maintained that extending the CQCs influence could make things worse.
“Handing authority to the Care Quality Commission may not solve the issue either,” Breeze said.
“The CQC has faced its own difficulties, most recently with delays in inspection cycles and questions about its capacity to manage even its existing remit.
“Extending its responsibilities into financial services risks creating confusion, duplication and weaker oversight rather than stronger.”
Breeze added that while the private health insurance market is not without flaws, it is also one of the most competitive areas of financial services.
“Competition, rather than excessive regulation, has driven insurers to innovate in areas such as virtual GP services, mental health support and faster claims processing,” he continued.
“Over-regulation could blunt this progress and raise costs at precisely the moment when more people are seeking affordable access to private care.”
Strengthen transparency
Breeze maintained that a more balanced approach would be to strengthen transparency requirements and improve consumer education, allowing individuals and businesses to make better informed choices.
“This would preserve the competitive dynamics of the market while addressing concerns around clarity and value,” Breeze continued.
For him, greater regulation is not inherently the answer.
“The role of the regulator should be to ensure fairness and transparency, not to dictate market structures or stifle competition,” he continued.
“At a time when PMI is providing vital relief for millions facing record NHS waits, we should be careful not to burden the sector with rules that could reduce access and choice.”
Unintended consequences
Brian Walters, managing director of Regency Health, pointed out that PMI is an annually renewable contract with long-term underwriting and therefore sits between general insurance and long-term insurance.
“It has practically nothing in common with general insurance yet is regulated under the same rule book,” Walters said.
“PMI poses unique risks to consumers and therefore requires a specialised regulatory regime,” he continued.
Though Walters maintained that with more regulation inevitably comes the law of unintended consequences.
“For example, compelling insurers to cover pre-existing conditions would increase already high premiums for everyone,” Walters added.
“A firm grasp of the commercial underpinnings of the market would be required and the concern is that this would be beyond any government body tasked with an overhaul.”
Detrimental to customers
For John Kerr, director of Incorporate Benefits, regulation from the CQC in addition to the already fairly onerous requirements from the FCA would be detrimental to customers, advisers and insurers.
“This would ultimately lead to increased costs,” Kerr continued.
“Given the significant increases which PMI insurance is currently suffering I am not sure this would be welcomed by anyone.
“I’d be much more interested in seeing some transparency and oversight around medical inflation costs which ultimately are threatening the ability of many people to afford treatment,” he added.
Strong regulatory framework
Joanna Streames, owner of Velvet Mortgage and Insurer Services, told Health & Protection PMI already sits under a strong regulatory framework.
“The real issue isn’t a lack of rules, it’s a lack of understanding. Too many clients don’t realise what their PMI policy actually covers until an adviser unpacks it for them,” Streames said.
“I regularly see policies with exclusions or co-payments the client had no idea about,” she continued. “That’s not solved by more regulation, it’s solved by more advisers and better training.
Streames added more regulation will just drive people away from advice and that leads to more poorly-understood, unsuitable policies.
“What this sector needs is access to good quality advice and better adviser training, not extra regulators creating hurdles,” she concluded.