A controversially cheap private medical insurance (PMI) scheme that sold direct to the public has been transferred to Bupa because it was not making any money.
The Daily Telegraph scheme was launched three years ago offering its readers PMI on a: no worse terms, basis at cheaper rates than going direct to an insurer or buying it through an intermediary.
A number of underwriting companies were called in during the three years to attempt to save the scheme which was losing money because of the cheap premiums its members were paying.
Alex Stitt, the Daily Telegraph’s enterprises director, said: “We were naïve. We traded in good faith but we accepted something that we were sold at face value.
“Bupa will protect policyholders from premium increases because they had enjoyed cheaper health insurance.”
But retired Ohra UK director David Potter said: “The newspaper should be ashamed of itself. It told people they didn’t need to pay such a price for PMI because insurance companies are charging administrative costs they can make in commissions and advertising. It was not right to just say: ‘We have a contract – buy it.’ The public needs advice.”
Association of Medical Insurance Intermediaries (AMII) chairman Roland Burnett said that many people cancelled their PMI policies to join the newspaper’s scheme because of its competitive premiums and ‘no worse terms’ clause.
The AMII considers PMI a long-term purchase because, although the policyholder renews annually, those who had made claims under the scheme and need continued treatment, can become locked into the scheme.
If they were to cancel the policy and seek an alternative insurer their pre-existing conditions would normally be excluded from any PMI policy with an alternative insurer.
He said: “It’s a difficult situation when people can be influenced to take out a product without considering the longer-term implications.
“There are issues other than cost to be considered. By buying a PMI policy from a newspaper page the advice given might not be as thorough as if they had taken the advice of a specialist intermediary.”