You could be forgiven for thinking the health insurance industry is not particularly proactive or collaborative. After all, don’t insurers have to compete for business? And surely intermediaries have too much work to do to dedicate their spare time to debating industry issues?
But behind the scenes many groups are initiating change, promoting product awareness and lobbying government on key issues. Members of these groups give up many hours of their valuable time to ensure the industry establishes common goals to the benefit of insurers and intermediaries alike.
One body responsible for a wide range of industry research and change is the Association of British Insurers (ABI). It represents the interests of 430 member insurance companies and provides advice and information on insurance policies to consumers.
It also lobbies the government through its working parties on a range of health insurance products, including private medical insurance (PMI), income protection (IP) and critical illness (CI).
These working parties were set up in response to comments from the Office of Fair Trading (OFT). It investigated IP, CI and PMI and found the public would find it more helpful if they could compare products across the industry. The PMI working party consists of a committee and panel. Ken Groom, an independent within the industry, is chairman of the committee and Fergus Craig, PPP healthcare’s commercial director, is chairman of the panel.
The panel helps define ABI policy on PMI, while the committee has a wider remit to lobby government as a representative body. Intermediaries are able to influence these discussions directly through committee membership. There are three intermediary representatives, nominations for which are currently being sought by the ABI.
The panel is working on the arrangements for regulation of PMI under the General Insurance Standards Council (GISC) regime, a new consumer guide to PMI and common definitions for use across the industry in PMI policies.
The ABI CI working party liaises with the OFT and produces standard illness definitions for the CI industry and a standard key features document for CI insurers.
A claims management project is being undertaken ahead of an expected “explosion of CI claims” due to the high volume of sales. The chairman is Nick Kirwan, Scottish Provident’s marketing and product development director.
The party meets every six weeks in preparation for a new statement of best practice including prostate cancer and heart attack definitions to be announced in May 2002. Following this, the party will continue to meet quarterly.
It has ten members including insurers, reinsurers, claims managers, underwriters, lawyers, product developers and actuaries.
There is a waiting list to join and, if a position arises, they try and retain the skills balance for example, by replacing a lawyer with another lawyer.
Independent financial advisers (IFAs) can be involved on a consultative basis and sometimes directly, for example on prostate cancer. (This issue was debated through the Association of Independent Financial Advisers (AIFA).) The ABI’s IP working party is chaired by Bob Ratcliff, GE Frankona Re’s executive, life and health claims. It has set up a standard key features document and guidelines featuring policy terms and conditions.
The party is looking at decision trees similar to those used for stakeholder pensions so the consumer can see whether IP is suitable for them.
The ABI’s long-term care (LTC) committee is chaired by Sandy Johnstone, Norwich Union’s retirement and protection strategy manager. Reinsurers, insurers, actuaries, underwriters and product marketers, meet quarterly.
It aims to maintain standards in the way LTC products are designed which is essential to developing and marketing LTC. Last year, it discussed the issue of regulation with the Financial Services Authority (FSA).
Disabled people are represented in the ABI’s Disability Discrimination Act (DDA) Working Party, also chaired by Kirwan.
It publishes guides for insurers to find solutions to dealing with the DDA because there are no legal precedents. The most recent guide was produced in September 2001 and sought ideas from insurance companies and disability charities. If there are court decisions, an updated version of the guide may be issued.
The membership is similar to the ABI’s CI working party and it meets three to four times a year. Kirwan says that as of October 2004 (when premises should all have access for disabled people) approaches, the frequency of meetings is likely to be increased.
Group Risk Development (Grid) is a lobby group promoting awareness of group IP and is a mix of intermediaries, reinsurers and insurers.
Chaired by Ken Richart, Swiss Re Life and Health’s group risk manager, Grid has set standards for the literature available for group life, CI and IP, making product comparisons easier for intermediaries and employers.
Best practice guidelines have been agreed to secure a consistent attitude among providers to linked claims. Plan switching is simplified, with terms and conditions changed to make it easier and safer for customers to change providers in future.
Aside from these working parties, intermediaries can get involved in a number of organisations such as the Association of IFAs. It represents 70 per cent of the industry including 17,000 IFAs and 6,500 IFA firms.
One issue that has affected its work is the transfer of regulation from the Personal Investment Authority (PIA) to the Financial Services Authority (FSA) in December 2001.
It also negotiated that members will be compensated by providers for the costs of changing regulation. One policy area still under consideration is polarisation. Currently an IFA must represent one company as a tied agent, or be totally independent.
The AIFA CI working party recently became the AIFA Protection Taskforce. Headed by Roger Edwards, Scottish Life’s product development and marketing director, it decided there ought to be a balance of interests consisting of an equal number of IFAs, reinsurers and insurers.
The taskforce will incorporate IP, CI and LTC into its discussions. The issues up for discussion are not prescribed – IFAs can suggest topics. The current agenda includes prostate cancer definitions, and what IFAs can do to prevent claims being paid through non-disclosure. The taskforce also aims to produce solutions to help IFAs write more business.
IFACare is a not-for-profit national organisation of IFAs with an interest in providing financial planning to those who need or may need long-term care in the future.
Set up in 1996, it now has 270 members lobbying for the regulation of LTC, educating the public, encouraging debate and developing new products and services for LTC planning. It does this through discussions between advisers, care providers and other interested parties. It has two group meetings a year and workshops.
Chairman Graham Fidoe says: “We have been building the foundations of a high quality educational programme through workshops throughout the year and have had a 95 per cent success rate in terms of achieving the objectives.
“The government now recognises that there is a need for regulation for LTC and this year we are going to improve the services to our members through the website and the workshops and continue to build relationships with other organisations such as Alzheimer’s Disease Society.”
Intermediaries specialising in PMI can join the Association of Medical Insurance Intermediaries (AMII). Acting chairman Larry Bulmer, a specialist intermediary and partner at Maidstone-based Health Decisions says: “The AMII is about promoting and maintaining high standards of professional ethical contact. It aims to promote and support the regulatory standards required to meet GISC compliance and to promote public and market awareness of the role of specialist intermediaries.”
The AMII has 65 members, including intermediaries and PMI insurers, and is setting up a GISC compliance working party to help members to become compliant with GISC regulation.
The Association of Insurance Intermediaries and Brokers (AIIB), a professional organisation supporting and promoting the practices of its members, also helps with GISC compliance issues and standard terms of business, data protection issues and staffing.
The British Insurance Brokers Association (BIBA) represents consumers and general insurance brokers. It has 2,500 member firms.
The Life Insurance Association (LIA) promotes knowledge of the value and importance to the community of the services of qualified financial advisers. It has more than 25,000 members from every sector of the industry – IFAs, managers and supervisors – and is supported by major life offices, networks, friendly societies and IFA firms.
The Society of Financial Advisers (Sofa) promotes professionalism among IFAs. It is a self-governing body assisting IFAs in achieving professional qualifications.
Affiliated to the Chartered Insurance Institute (CII), it has more than 10,000 members. It sets minimum entry qualifications, and encourages ongoing development through study and examinations.
The Investment & Life Assurance Group (ILAG) is a trade association involved in the development of public policy, governing and encouraging the private provision of financial services.
Members are life companies, unit trust groups, friendly societies, and reinsurance companies and associate members who are consulting actuaries and accountants. The group is soon to expand its membership to IFAs for a wider mix of views.