Insurers Prime Health and Norwich Union Healthcare have united to lobby the Office of Fair Trading in a bid to prevent the moratorium approach to underwriting being outlawed.
The OFT is due to publish a report on health insurance in the next few weeks. In 1996 it published a report claiming the moratoria was unfair to consumers. This led to an outcry from insurers who continue to use the moratoria, and the OFT agreed to re-think its stance. But there are fears its view will be unchanged.
Some insurers fear the OFT had been swayed in its judgement by insurers who do not offer the moratoria such as PPP and BUPA.
To fight its case, Prime Health and Norwich Union Healthcare jointly commissioned research to support their view that customers should have a choice between moratoria and full underwriting.
This research showed consumers want freedom to choose the way their private medical policies are underwritten. Prime Health’s corporate affairs manager Caroline Southwood said: “Our concern is that the OFT should listen to the voice of the consumer. We want to safeguard choice and this research proves that this is valued by consumers. Most of our customers choose the moratoria.”
Tim Baker, Norwich Union’s commercial director, said: “We cannot understand the OFT’s stance when our requests for both methods of underwriting to be maintained is so clearly what consumers want.”
A spokesman for the ABI said the association did not have a problem with the moratorium. “Providing it is fully explained to customers there is nothing wrong with it,” he said.
However, John Castagno, product development manager for BUPA said his company was concerned with “providing the customer with clarity and we don’t believe it’s in the customer’s interest to offer moratoria products. While the moratoria is certainly a speedier way of selling health insurance we do not support it. We favour a degree of underwriting at the point of sale.”
He added BUPA had sold a moratoria product in the 1990s, but this had been dropped following the insurer’s decision to become more “customer led”.