In 1991, Peter Merriott-White, a 51-year-old engineer, took out private health care cover for himself and his wife. He thought the £40 monthly premium would bring him peace of mind.
Nearly five years later, Merriott-White collapsed with a blocked artery. Confident that his policy would cover him, he went for private tests and an exploratory operation but his insurance company refused to pay the £2,500 bill. It claimed that Merriott-White had not declared important information about his health when he first took out the policy.
“I’d gone to my doctor with a crampy right shoulder,” explains Merriott-White from Gloucestershire. “He put me on half an aspirin a day and I started going to a ‘keep well’ clinic. I’d no idea that preventative action of this type counted as medical treatment for insurance purposes. I suffered no ill-effects so didn’t think it was important to mention it. Until I collapsed I’d had absolutely no problem with my health.”
Merriott-White’s policy stated that he must alert his insurance company to `any illness which existed, until a continuous period of two years has passed without treatment and advice’. Until he collapsed, Merriott-White had suffered no ill-effects from his mild angina and says no one had told him what sort of information he should declare on his insurance application. “I feel I’ve been duped,” he complains. “People must be made aware of how they can be tripped up by insurers.”
Horror stories like this one appear all too frequently in the press where health insurance is continually criticised for being too expensive and having too many exclusions. The consumer programme Watchdog
also recently launched a stinging attack on the industry citing a number of cases where policyholders complained they had been unfairly treated by insurers.
Whether the complaints are justified or not, they damage the public image of health insurers and make life even more difficult for independent financial advisers trying to sell healthcare policies.
As a spokesman for the Association of British Insurers points out: “It’s not good for companies if potential customers are always reading what a lot of bastards they are.”
Apart from knocking stories in the media, the industry also has to overcome the hurdle of the public’s perception that PMI is for the rich.
“PMI is currently viewed as a luxury purchase in competition with cigarettes and holidays,” says Bruce MacLellan, head of marketing at Legal & General. “The challenge is to bring health insurance into everyday life. New providers like ourselves, Abbey National and Boots are attempting to position health insurance as a necessity rather than a luxury,” he adds.
One of the most useful and effective ways of drawing the public’s attention to the benefits of health insurance is through the use of case studies in the national media. While cases like Merriott-White cast a shadow on the industry, highlighting human examples when things do go right can go a long way to redressing the balance.
“Case studies bridge the gap between insurers and potential customers and add a useful human touch to newspaper articles,” MacLellan explains.
Gordon Puckey of public relations firm Biddick Harris also believes case studies are a crucial weapon in any medical insurer’s arsenal and uses them frequently to promote his client Clinicare: “People relate to case studies and are able to see the real benefits of health cover. If you provide a case study you can expect your company to be mentioned once or twice in the article. It is also unusual for a journalist to write something negative about the case study so there is relatively little risk in providing them. Plus you get dominant coverage because there is usually a photograph as well,” he adds.
Lynda Cox, Skandia Life’s marketing manager, is another fan of case studies and uses them to promote Skandia’s critical illness policy. But she warns it is not always easy to get policyholders to agree to take part as health insurance can be a sensitive area: “Case studies are one of the best ways of giving real life examples of people who have benefited from having health cover – but they can be difficult to get.
“We have had cases of people saying they can’t be a case study because their wife doesn’t know they have the claim money or they don’t want anyone to know about their illness. Women who have had breast cancer are particularly reluctant because that is a such a personal and traumatic thing.”
Intermediaries can be invaluable in the hunt for case studies. But health insurers trying to get some good publicity have other options too.
“Product features can also be good vehicles particularly if you have something outstanding or unique to promote,” says Puckey. “Consumer guides also work very well. Once you have written and printed them they are relatively cheap to run. Newspapers like to use them and they are a good way of getting your hotline telephone number in the paper so act as a good lead generation tool as well.
“To really succeed in the image game, a company needs everyone in its organisation thinking PR and at least one spokesperson who knows the industry issues. We are also very happy to recommend IFAs who will speak to the press. This raises their profile and gives the journalist another perspective,” adds Puckey.
Advertising is also useful for raising name awareness and has worked very well for PPP. “Three years ago only 20 per cent of the public were aware of PPP and what we did. Now, after two major advertising campaigns, our research shows that our name awareness among the public has reached 70 per cent,” explains company spokesman John Neville.
While there are a number of PR devices available to health insurers trying to improve their public image, perhaps a closer look at the main causes of complaints might help show how the industry can act to stem the tide of negative publicity.
The Association of British Insurers is currently doing some research into the standards and image of the industry and looking at claims handling, literature and complaints handling procedures. The results of its survey will be out later in the year.
“It is not good enough saying: `Let’s have an advertising campaign and tell them how good we are,’ our image is based on the way customers find us when they deal with us,” comments an ABI spokesman.
It is clear when looking at press coverage of the industry that many complaints stem from the fact that customers still do not fully understand what it is they are buying when they purchase health insurance.
George Connolly of Dorchester-based specialist medical insurance broker, Healthcare Matters, puts the blame for this squarely on insurers’ shoulders: “If the public understood what they were buying a lot of the problems which give the industry such bad press would not arise. Insurers do not give customers enough information about how to use health cover and build up high expectations which are rarely met.
“Too many insurers have literature with ticked boxes and say: `This is only a rough outline the full details are in the policy documents which you get when you pay us some money.’ I don’t like this. They need to be is up front and give people the right information at the beginning,” adds Connolly.
Mike Williams, chief executive of trade body BIIBA, agrees: “A lot of medical insurers have been marketing driven. The policy has been sold rather than bought. That leads to focusing on simple good messages and shoving to one side the difficult to cover points. Insurers have avoided coming clean and suffered the consequences.”
This view is also backed up by the experience of the Insurance Ombudsman. Graham Cox, the Ombudsman’s communications manager, says the majority of complaints it receives are down to the fact policyholders have not understood what they are covered for: “Insurers must make it clear what the policy covers, draw attention to the restrictions and exclusions and make sure it is suitable for the customer.”
The message is clear. To improve their public image, insurers must bite the bullet and make their policies clearer and less bedevilled by exclusions. A set of core definitions which are used throughout the industry could also serve to make policies easier to understand.
Better regulation of the industry could also do wonders for its public image.
“Regulation is inevitable in the long term,” says Tessa Webster, Legal & General’s provider and customer services director. “I think it would be a positive step for consumers. People feel more comfortable and protected by regulation,” she adds.
Janice Allen, of the National Consumer Council, agrees. She says: “The problem with insurance is that it is self regulated through various codes which do not always work as well as they might. Insurance companies should be more willing to educate their customers and be honest about what they are offering. If we are going to have a society where people are having to increasingly rely on their own insurance or savings, we need an industry that they can trust.”