The publication of statistics on declined claims has been commonplace among protection providers for a number of years, but the same is not true of the private medical insurance (PMI) industry.
Just one PMI provider – Universal Provident – publishes details of its declined claims, and while it argues this is a natural extension of what happens in the protection industry, many argue the data represents something very different in the world of PMI.
So with Universal Provident publishing its latest set of data earlier this month, is this information of value to intermediaries and their customers, and should other insurers be following suit?
Universal Provident, a relatively small PMI provider which also offers products including income protection (IP) and travel insurance, has been publishing claims data since 2011, which it says is part of its commitment to an open and honest relationship with the broker market.
Dale Tranter, assistant group underwriting manager at Universal Provident, says the provider could see no reason why the publication of claims stats in the protection industry should not be “logically extended” to PMI.
“I think people are as interested to know why claims are not paid out for PMI as they are for critical illness,” he says.
But according to Mike Blake, director of intermediary firm PMI Health Group, this information is “interesting rather than useful” in the context of PMI transparency.
“Most medical insurance claims are rejected because what is being claimed for is either a general or personal exclusion,” he says. By contrast, the most common reasons for IP or critical illness (CI) claims to be declined are non-disclosure or the medical definition not being met.
Universal Provident’s latest set of figures are evidence Blake’s point; they show that of the claims it turned down in 2012, 38% were due to failure to complete or return a claim form, most commonly in cases where the policyholder had gone for treatment without authorisation.
Other common reasons include outpatient claims being submitted on an inpatient-only policy, and claims being submitted for pre-existing conditions. Universal Provident does not publish a figure for the proportion of claims which are declined, as is commonplace among protection providers.
In addition to variations in the reasons why claims are declined, PMI also differs from protection in that the latter sector initially began to publish claims stats to help stem a negative public perception that policies rarely paid out – an issue the PMI industry arguably does not face.
Graeme Godfrey, director at PMI broker Best Go Private, says declined claims are very rare in PMI.
“If a product is sold properly, the customer should understand what they are covered for,” he explains.
PMI Health Group’s Blake says claims rejected statistics for PMI are ultimately a measure of “how well the policy is understood by the policyholder, how good the claims process is and how well it is followed”.
“I would not expect many insurers to follow Universal Provident’s lead by publishing claims rejection data but I hope they use the statistics to identify if pre-sale and member communications can be improved,” he adds.
But Richard Cowley, independent healthcare consultant at Premier Choice Group – the specialist PMI and protection intermediary – believes all health insurers should consider publishing the data.
“This could help brokers concentrate more on making sure their clients are aware of what they are not covered for,” he says. “It may also reduce the number of declined claims.”
However, several insurers have raised concerns that, as with protection claims stats, the data would need to adhere to a common standard in order to be meaningful for intermediaries and their customers.
In June, the Association of British Insurers announced it is to develop new definitions for what constitutes a paid and declined protection claim to ensure providers are reporting their claims stats in a more consistent way, following sustained concerns from providers that the data is not being compiled on a like-for-like basis.
Dr Doug Wright, medical director at Aviva UK Health, says: “It would seem a natural progression for the industry to begin to publish PMI claims stats, but as with IP claims, we would need to develop a common reporting method for any data to be meaningful to customers and intermediaries.”
He says it would be far more difficult to make proper comparisons across the industry for PMI stats than for protection as the product allows customers to tailor cover to their own needs, meaning exclusions, enhancements and excesses are all variable.
“Where would we draw the line on which declines should be reported? At Aviva, we maintain that we pay out on all eligible claims,” Dr Wright continues. “One provider may have very limited benefits on their product and a low decline rate, because they have been successful in communicating the policy’s limitations to their customers, but would this claims paid rate be a useful indicator of the product’s position in the market?”
Dr Keith Klintworth, director of clinical risk at fellow PMI provider PruHealth, agrees that comparisons between companies could be “misleading” due to variations in providers’ processes and terms and conditions.
“We produce this information for our own internal and regulatory purposes but it would only be of value to customers if it is directly comparable,” he explains.
Dr Klintworth adds: “Declines may also be based on the limited or non-available benefits under the individual policy terms which can vary widely, so these figures would not give a useful overall picture of how the industry is performing.”
What is of more value, he argues, is an understanding of the main pitfalls to avoid when making a claim, which he says tend to remain fairly constant across the board.
A STARTING POINT
There would be some merit in providers working together to explore whether there is a common way to report their claims data, suggests Aviva’s Dr Wright, but he says that “at the moment we seem to be a long way away from the point where the data will be of any value”.
One starting point, he argues, may be to expand on the data behind the complaints upheld statistics that are published by the Financial Ombudsman Service (FOS).
“But until the industry agrees any standards in this area, this too may only serve to generate unjust league tables and create customer confusion,” Dr Wright adds.
The FOS publishes complaints data at a company level every six months, but only for those firms for which the Ombudsman received and resolved at least 30 new cases in the period.
WPA, the medical insurer, publishes details on its website of the number of complaints per 1,000 customers referred to the Ombudsman against it.
Charlie MacEwan, corporate communications director at WPA, says transparency is highly important in the PMI sector and that complaints data is more “black and white” than claims stats – plus, it can be independently verified by the FOS’s website.
He says: “The Ombudsman should publish complaints data for all companies. And if the statistics are to be useful to customers, they should be comparable and objective.”