Nothing is more harrowing in life than to be diagnosed with a critical or chronic illness. Matters are made ten times worse when your insurer informs you that they won’t pay up on your critical illness policy or private medical insurance for the HIV or cancer you are suffering from.
You are asked to read sub-clause five of paragraph 327 of the small print, which informs you that you are suffering from the wrong type of cancer. Only tumours below the knee are covered and only the first five days of your treatment will be paid for, then it’s down to you to find the finance.
This scenario may sound absurd, but in spite of brokers and insurers being regulated, this type of practice continues to take place. It has been a slow process to clean up the industry and to ensure consumers get a fair deal.
A short time ago Cancer Backup, a registered charity, highlighted this problem by organising a wide ranging mystery shopping survey, which exposed some disturbing facts about the private medical insurance industry. It found that of all the leading insurers only BUPA provided cover for cancer patients throughout the duration of their illness. Only immediate treatment is covered by the majority of health insurance policies. Treatment or care over a prolonged period, such as hormone replacement or chemotherapy is normally excluded.
Although brokers and insurers want to finance long term cover for policyholders with chronic illnesses, they won’t always make it clear to potential customers at the time of signing up what they are covered for.
Although both Macmillan Cancer Support and Cancer Backup have been in consultation with like minded organisations within the industry to raise the standard of sales practices and make the wording of policy documents clearer, progress has been slow since the report was published two years ago.
Private medical insurance and critical illness cover is normally taken out by people who are comparatively fit and healthy. The last thing that crosses their minds is getting cancer. That is why it is so important to spell out a policy’s exclusions before they sign up.
A statement of best practice for companies writing and selling medical policies has been updated recently by the Association of British Insurers (ABI,) which is a welcome step in the right direction.
The trade body has now recommended that insurers and providers selling these types of insurance should prepare typical case studies, which explain the circumstances when a policy will or will not be paid. Unfortunately insurers are not obliged to adhere to this code, which is voluntary.
Although the ABI’s initiative is to be welcomed, the best way of clarifying a policy is by asking the salesman to explain the small print.
Furthermore, industry jargon is still being used by insurers to confuse the consumer. For example it is wrong to classify cancer as an acute or chronic illness, argues Cancer Backup. However insurers are adamant that it should go in the chronic category. Consumers only hear about this when their claim has been rejected.
Although the ABI have their heart in the right place, the insurers can only be forced to improve their standards by the regulator. Better training of call centre staff, who sell the majority of the policies, is also long overdue
More rigorous sales procedures are needed with jargon being eliminated. Ultimately it falls upon the insurers to ensure that their customers are fully aware of the terms of their policies before they commit themselves.