As private hospitals divert their resources to tackling COVID-19, are insurers doing enough to demonstrate their value to customers? Emily Perryman reports.
With private hospitals being used to shore up the NHS during the COVID-19 pandemic, there has never been a more pressing time for the private medical insurance (PMI) industry to demonstrate its value to members.
Under an unprecedented agreement between the private sector and the health service, private hospitals in England have reallocated almost their entire capacity to the NHS to help tackle the outbreak and deliver other urgent treatments.
It is absolutely right that private facilities do all they can to help the country through the pandemic, but it is a worrying and confusing time for PMI members. Many will be due to have treatment, others will be mid-claim and several could be struggling financially as social distancing measures put them out of work.
Healthcare intermediaries have already received calls from clients saying they need to cancel cover because they can no longer afford the premiums. Many clients are asking for clarity on what support insurers will provide if they get COVID-19.
Most insurers remain tight-lipped over their approach to claims and premiums during the crisis, but a few have come forward with statements that aim to reassure members and, hopefully, prevent a customer exodus.
Lack of hospital capacity
No one knows how long the lack of hospital capacity will last, although it understood the NHS’ agreement with private hospitals is for an initial period of three to four months and will then be reviewed.
The Association of British Insurers (ABI) has warned that customers due to have non-urgent treatment will only be able to receive it “when it is reasonably possible to do so and the COVID-19 situation has stabilised”. People who require urgent and time-critical care, such as cancer treatment, are being treated as a matter of priority.
What is clear is that nearly every patient about to have routine care will be affected by delays, which could extend for several months. A senior broker recently told Health Insurance & Protection that while some routine private treatment is still taking place at facilities outside of London, capacity in the capital is almost non-existent. There are concerns independent sector hospitals in other cities will become closed to private business as well.
Among insurers, WPA has told its members that elective treatment in private hospitals is expected to cease “for the coming weeks”, while AXA PPP says members who have treatment booked in the next two to four weeks should contact the hospital for further information.
“In common with all insurers, we are regularly speaking with the private hospital sector to understand how this recent agreement will impact our members and how capacity might change,” says Dr Keith Klintworth, managing director of VitalityHealth. “Currently, a range of hospital services remain open to our members and some in-person care is continuing across the UK. We are continuing to fund eligible care and where a member cannot access care, they will be eligible for treatment as soon as it is available once again.”
PMI members who are mid-claim (who have already had an outpatient appointment and an initial procedure) could also suffer delays, although it depends on how complex their condition is. WPA, for instance, says it is liaising with members who are receiving complex treatment to ensure their care is maintained and consultants will be in direct contact with patients to confirm treatment plans.
“We are asking customers in this position to get in touch with their hospital, specialist or consultant to discuss their particular situation and seek further advice – there may of course be a delay whilst they make the right decisions for all of their patients,” says an Aviva spokesperson. “The terms and conditions of our policies haven’t changed; however, the availability of private treatment has been restricted by the COVID-19 pandemic.”
Rebates and cashback
In many cases, members may feel their PMI policy is no longer delivering what was promised when they took out cover. Combined with the financial pressures they could be facing, several members are likely to be considering cancelling cover.
The ABI and individual insurers are urging members not to take such drastic action because cancelling a policy could lead to difficulties obtaining cover in the future. Klintwoth says intermediaries have a key role to play in reinforcing this message.
“It is important for intermediaries to emphasise the temporary nature of the impacts of coronavirus on private hospital capacity, and that any delayed treatment will continue to be covered at a later date. PMI continues to present value now and in the longer-term,” he says.
“It’s also important that intermediaries ensure that their clients understand the potential serious risks of cancelling cover, including finding new cover in the future. For example, anyone with any pre-existing conditions may find it difficult to obtain new cover post-pandemic, or possibly even not be able to obtain cover at all.”
In the meantime, some insurers are trying to alleviate the financial pressures facing customers through rebates and cashback. Bupa recently announced it will pass on any exceptional financial benefit arising from COVID-19 to its UK health insurance customers. The insurer says it is commissioning a third-party review to ensure what it does is fair and reasonable across its different customer groups.
In a letter to its customers, WPA also says it is committed to returning any profits to customers, adding: “We do not yet know how or to what extent any premium rebate will look like; it may be several weeks before we are able to communicate the outcome, but we will ensure this happens as soon as is practicable.”
Others insurers are offering enhanced cashback to members. Vitality has introduced a specific COVID-19 cashback benefit, under which members who require a hospital stay because of coronavirus can claim £250 per day for days one to eight, and £500 for day nine onwards, subject to a maximum of £5,000.
The Exeter is providing an enhanced cashback of £500 per night to members who are treated without charge in an NHS or private setting for any eligible condition including COVID-19, up to a maximum of £10,000. Aviva says its existing NHS cash benefit will be available for any customers hospitalised as a result of COVID-19, and General & Medical has a premium reduction scheme in place for customers who contract the virus.
Peter Lurie, managing director of Proactive Medical & Life, says although cash benefits are to be welcomed, customers have to be sick to take advantage of them. “My message to the insurance industry is that this will be a time of financial hardship for customers, and if insurers can look at introducing premium holidays that would be very helpful,” he adds.
A spokesperson for AXA PPP says: “We’re working to understand how the agreement will affect customers’ premiums. It’s still a work in progress and we’ll let them know more as soon as we can.”
Some insurers are trying to keep hold of customers by focusing on the additional benefits PMI offers – particularly things like virtual medical appointments.
Bupa, for example, has expanded its range of health support services and resources that customers can access from home, including telephone and video consultations with nurses, GPs and consultants; specialist help for physiotherapy and mental health; and chemotherapy at home for cancer patients.
WPA has extended its remote GP services to its retail and SME customers at no extra cost and has expanded benefits to cover telephone and video consultations with healthcare providers. It is also trying to broaden the availability of its mental health helpline to retail customers at no extra cost.
Vitality, meanwhile, is offering up to 50% off selected Garmin and Polar devices to help members track their workouts at home; a new Active Reward that gives members up to two movies on demand at home each week for staying active and earning points; and an enhanced healthy food benefit with Waitrose, which boosts the discount available on the supermarket’s Good Health range to 25%.
Long term impact
Most insurers are optimistic that the impact of COVID-19 on private healthcare capacity will be temporary and that treatment will be covered as soon as things start returning to normal. Although a few customers might cancel cover, many argue the industry will become stronger in the long run. There will be a huge backlog of patients waiting for NHS treatment, making PMI look more attractive than before. And although there will be some waits for private treatment until normality resumes, this is expected to level out reasonably quickly.
“The impact on the NHS stopping all non-urgent operations and treatment is expected to have a significant effect on NHS capacity and waiting lists once the pandemic is over,” says Klintworth. “This will make PMI cover highly relevant and attractive.
“As in many industries, the impacts of COVID-19 will change the way that we work and the services we provide, for example accelerating innovation and adoption of telemedicine services and remote treatments.”
According to the ABI, the existing long-term value of PMI is not only still true, but also potentially higher given the additional benefits being added and the possibility that more complex treatments emerge as conditions and diseases progress.
In the meantime, intermediaries can play an important role in supporting the industry during the crisis, according to a spokesperson for Aviva: “As insurers continue to work hard to maintain their operational processes and provide vital customer support, there has never been a greater need for intermediaries to provide valuable advice and guided decision-making to ensure their clients’ interests continue to be protected, they understand their options and can benefit from all of the services and benefits that are available as part of their policy.”