Angry health insurers are astonished by the Office of Fair Trading’s (OFT) accusations that they have failed to address its concerns about moratoria products and premium increases.
The OFT has branded insurers’ warnings about premium increases and moratorium-based products as “vague”. It wants insurers to publish statistics on average increases in PMI premiums over the last five years and to research whether policyholders are foregoing medical advice during the moratorium period.
Although many insurers are reluctant to publish previous premium increases because they feel it may mislead people, some intermediaries support the OFT’s stance on this matter.
However, intermediaries and insurers believe there is little evidence that policyholders are forgoing medical advice during the moratorium period.
Under the moratorium system, consumers do not have to undergo medical examinations but pre-existing medical conditions are not covered for a set period.
Specialist PMI intermediary Michael Payne said: “Providers could certainly make people aware of how premiums will change as they grow older, perhaps by including premium rate tables in their literature. There was also a general premium increase figure in the OFT’s first health insurance report – 6-12 per cent a year above Retail Price Index (RPI) – which some insurers quoted in their documents. It might be an idea to start using that again.”
Standard Life Healthcare head of marketing Julian Ross said: “I am astonished by the suggestion that policyholders are forgoing medical advice during the moratorium period. I cannot believe anyone would put their health at risk for two years just to take advantage of this type of policy and no one has been able to prove that this is happening.”
Director general of fair trading John Bridgeman said: “Vague warnings about escalating premiums and the conditions attached to moratorium-based policies do not address our concerns and we will continue to press for improvement.”