Private Medical Insurance
How will the latest changes by the Financial Conduct Authority affect me?
What’s the The Financial Conduct Authority (FCA) has recently issued new guidance to the insurance industry, including brokers, requiring them to encourage clients to shop around.
The FCA’s Consultation Paper said that its proposals were intended to address concerns about levels of consumer engagement and the treatment of consumers by firms at renewal, and the lack of competition that results from this.
The proposed new rules , which applies across all personal lines general insurance markets, including Private Medical Insurance, requires firms to:
- disclose last year’s premium at each renewal;
- include text to encourage consumers to check their cover and shop around for the best deal at each renewal;
- identify consumers who have renewed with them four consecutive times, and give these consumers an additional prescribed message encouraging them to shop around.
What does the FCA say about this?
The FCA says they do not want to encourage an excessive focus on price. To ensure that price and cover are balanced in the ‘shopping around’ disclosure, which must be provided at each renewal, they require firms to encourage consumers to also consider cover when seeking alternative quotations.
An interesting idea. It would seem the regulator wants customers to search around and check they’re getting the best value. But, and it’s a big but, does this not convey to the customer that price is what matters and should be compared. They say they don’t want to customers focus excessively on price, but in reality, unless you have sound knowledge of the cover/policy in question how else can you evaluate the cover except on price?
Everyone’s far too busy nowadays to be checking that the alternative quote they’ve just got actually offers the same level of cover or better, and evaluate exactly what benefits could be lost by moving. The sad fact is – people don’t find out until it’s too late – at the point of a claim. I know personally of several cases where the client has moved products for a cheaper premium only to find out the cover is either inferior to what they previously had or I the case of Private Medical Insurance, weren’t able to claim due to it being a pre-existing condition which they’d claimed for under their previous Private Medical policy.
Looking at Private Medical Insurance in more detail (although this is still very high level), let’s consider some of the choices and options that are available from one insurer and the decisions that looking for alternative quotes could result in from these:-
- Will any exclusions apply for pre-existing medical conditions covered by your previous private medical policy?
- What excess do you want for your insurance policy?
- How much of a saving will I get for increasing the plan excess?
- Do you take the 6 week option? Selecting the 6 week option with some insurers typically means you would only be covered for in-patient or day-patient treatment if the wait for that treatment is longer than six weeks on the NHS. If it’s less than six weeks you’ll need to use NHS facilities as a non-paying patient or self-fund any private treatment. Which will likely mean that any cancer claim would be dealt with by the NHS rather than privately as the NHS are typically very quick when dealing with cancer;
- Do you add or remove ‘Reduced out-patient’ cover? You can usually choose to limit out-patient diagnostics and treatment to a fixed amount all the way down to nil. Types of treatments that may be covered by this include CT, MRI and PET scans, Radiotherapy and chemotherapy and Physiotherapy for pain in the back, neck, muscles or joints;
- Do you require ‘Mental Health’ cover? Do you understand what is and isn’t covered so that you can make an informed decision on whether the increased cost is offset by the benefit on offer?
- What about Routine & GP Services? Would you like cover for Specialist fees for consultations and diagnostic tests for a chronic condition? Want to know your plan provides cover for GP referred treatment by a physiotherapist, chiropractor, osteopath or an acupuncturist?
- What hospital do you want to be treated at? Insurers usually offer a few lists which range from a restricted list of hospitals where you get treatment at to a complete national list. Do you want to be treated for a medical condition at the Duchy Hospital in Truro?
- Do you want dental cover? Want routine dental treatment to be covered by your policy?
- Do you want optical cover? Want to know that the new glasses you need are covered?
- Do you understand the impact different types of claims can have on the premium at renewal?
- What added value benefits does the insurer offer? Are there discounts on offer for health and fitness clubs? If you use these anyway then a 25% saving can go some way to offsetting your private medical premium.
This list isn’t exhaustive and it really doesn’t do justice to the myriad of options available for Private Medical Insurance. The same applies to Group Private Medical insurance schemes.
With so many options available to you, all of which can affect your cover when they come to claim, it’s important you seek independent advice from a specialist insurance broker to help you through the financial minefield before making any decision about whether a change of insurer is right for you and your family.
If you would like a spot of light reading then the FCA’s policy statement on “Increasing transparency and engagement at renewal in general insurance markets” has been published recently following their Consultation Paper 15/41, which was released in December 2015.
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Last updated: 16th October 2016
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