A recent reader column on www.healthinsurancedaily.com has sparked debate across the private medical insurance sector about the issue of trust between brokers and insurers. Sam Barrett takes up the story
For many medical insurance customers, brokers provide an invaluable service. As well as benefiting from their expertise and market knowledge, broker clients appreciate having someone to act on their behalf with an insurer, spotting any mistakes and arguing their corner in the event of a claim dispute.
But, as Brian Walters, principal of Regency Health, pointed out in a recent broker viewpoint feature for HI Daily, the insurers are making it increasingly difficult for brokers to carry out their duties.
“Some insurers no longer send us a copy of the client’s full membership certificate,” he explains. “This is frustrating: it’s essential to have sight of the full certificate for us to do our job properly.”
There are a number of reasons why insurers have stopped sending these copy certificates to brokers. One of the main ones is technology.
“We’re always looking for ways to make the process as paper-free as possible,” says Paul Moulton, intermediary distribution director at AXA PPP healthcare. “Digital fulfilment is faster and slicker for all parties. There’s nothing to stop the customer printing off the certificate and sending it to the broker if they want.”
The second reason is data protection and more specifically medical confidentiality. With this, the insurers argue that unless the broker has consent to see the information, it is confidential and cannot be disclosed to them.
In particular, where a broker places group business, the contract is between the broker and the employer rather than the employees. Therefore, if the insurer sends the broker copy certificates for employees, as these could contain sensitive medical information, it is a breach of data protection and their medical confidentiality.
Moulton adds: “We’ve taken the view that what’s included in the membership pack is confidential to the employee and their dependants. Access without authority from the individual could be a breach of data protection and medical confidentiality.”
While the insurers have their reasons for no longer sending certificates, it’s causing significant frustration among many brokers.
“Being able to check these documents is an important role of the broker,” says Richard Kerton, senior medical insurance consultant at Assured Futures. “Clients depend on us to complete the applications correctly, submit their details correctly and ultimately ensure they have been accepted correctly. Should a client be refused a claim as a result of incorrect exclusion wording, this reflects badly on all parties and could cost the insurers and brokers business.”
While instances of these mistakes are few and far between, they do happen. In his broker viewpoint, Walters referenced two recent incidents (no specific insurer is mentioned) where the agreed terms weren’t included on the certificate. The first saw a prostate condition excluded on the certificate, even though the insurer had agreed it could be covered, while the second, saw the start date of the moratorium for a transferred member changed from 2004 to 2010.
But not everyone wants to see these certificates being sent to advisers. Although he’s happy to support a call for greater transparency around the provision of these documents if it’s something that members want this, Stuart Scullion, commercial director of Punter Southall Health & Protection and chairman of the Association of Medical Insurance Intermediaries (AMII), believes there’s no real need for brokers to receive copy certificates.
“Insurers shouldn’t be sending this information out to brokers. It is confidential,” he says. “We should have more confidence in the insurers to do their jobs properly. By removing the need to send out copy certificates, there will be operational efficiencies that will benefit all parties.”
When he ditched copy certificates while at the Private Health Partnership, to ensure his clients’ interests were still protected, he amended the letter he sent to clients to draw their attention to the membership certificate.
“We highlighted the fact that we wouldn’t be able to check the accuracy anymore and strongly advised them to review it and advise us of any errors,” he adds. “We never had any issues.”
Hiding behind data protection also causes significant frustration for brokers. Although Walters accepts that it’s difficult to argue against this for group business, as the contractual arrangement is between the broker and the employer rather than the employees, he says it doesn’t stack up in the individual market.
“When a client submits an application form containing medical disclosures via a broker it’s clear that they tacitly consent to the broker processing their data so the data protection point is moot,” he says. “I was told by one insurer that they were protecting their client. From what I replied – diligent broking?”
Just how frustrating it can be is highlighted by Richard Bamford, managing director of Citrus Healthcare.
“Presently a client can tell us they have a bad knee and we’ll pass this information on to the insurer, who then tells us they can’t say anything about our client’s knee,” he says. “It doesn’t make any sense. It’s a really messy and uncomfortable way to work and a complete inconvenience for our clients.”
While he appreciates insurer nervousness around data protection, to ensure information can flow both ways, he suggests introducing a box on the application form to enable clients to give consent for the insurer to share information with the broker.
“At the moment I have clients who give their consent but the insurers say it’s unacceptable, even in writing,” he says. “Formalising consent in this way would be a simple, and very useful, move.”
It’s a compromise that Walters has already seen with other insurers too. For example Bupa has introduced an intermediary consent form that allows clients to consent to a named broker receiving a copy certificate.
“It would be good if this type of consent could be included within the application form,” he adds. “We have created our own consent form for use where copy certificates are not ordinarily forthcoming but it has so far been ignored.”
Time to switch
There’s a third reason why some believe the insurers have stopped sending copy certificates. By withholding the certificate, some believe, it could enable insurers to prevent switching.
Walters says this is highly unlikely: “It may delay a switch but it’s never going to prevent it,” he says. “In any event, creating barriers to clients switching providers would be a breach of outcome six of Treating Customers Fairly.”
Whether or not insurers are trying to create barriers to prevent switching, there are certainly much easier and fairer ways to facilitate the transfer of business. Other areas such as motor and home insurance use electronic data interchange to transfer policyholder details quickly and without undue hassle for the customer. This also helps to reduce fraud.
Scullion believes the introduction of this type of technology is long overdue.
“Medical insurance is probably the least efficient sector in the insurance industry,” he says. “We’re archaic. We’d all see a benefit if we ditched the paper and brought ourselves into the 21st Century.”
Wayne Pontin, managing director of Positively Health, agrees. As well as believing the insurers should introduce more technology he adds that a more fundamental change would also help to remove some of the aggravation.
“If insurers paid the same commission for initial and renewal business it would stop a lot of the switching that takes place,” he explains. “There are times when a switch benefits a client but higher initial commission can create an incentive for some brokers to move business.”
While there are clearly a number of steps the medical insurers could take to remove some of the broker frustrations, when it comes to supplying copy certificates the simplest may be to give the broker the option to receive it. Moulton accepts that this might be the best way forward.
“If we receive a request from a policyholder to supply their broker with a copy certificate then we’re happy to do this,” he says.
Not all advisers feel this is a workable solution though.
“Having to have signed consent when all our business is conducted over the phone would not work well for us,” says Kerton. “We would want to have a verbal confirmation agreement knowing our calls are recorded in the same way insurers are happy for us to collect the data over the phone.”
His suggestion would be to ensure the necessary details are easily accessible by the client. This would make it much easier to retrieve the necessary information at renewal or supply it to the broker to check its accuracy.
Scullion is also reluctant to allow brokers to select whether or not they receive a copy certificate, albeit for very different reasons.
“Introducing more options into the insurers’ systems is a recipe for disaster,” he says. “If they get to do both, there’s a much greater chance that mistakes will be made.”
But, although there are potential issues, making this information more easily accessible would enable brokers to continue to provide this level of service to their clients. However, looking further into the future, the days of paper copy certificates are certainly numbered.
“It won’t be long before there are no paper certificates at all anymore,” says Pontin. “Everyone wants the efficiencies of transacting business online. You can’t stop the evolution of technology.”