CentralBank’soversight ofhealthinsurersexposes oldesttricksinthebook
The Central Bank, which recently became a health insurance watchdog, has exposed some of the industry’s oldest tricks in the book.
Its first investigation has picked up on dubious practices that help ensure most people pay over-the-odds for this important and costly product.
The CB has found just 15% of people change plan, let alone provider, annually.
This allows the industry to gradually run down the benefits – and increase the costs – of such tired old plans over many years.
It puts the money thus saved in coming up with better-value plans with all sorts of bells and whistles to the customers it really cares about – those on competitive corporate plans that mean big business. Yet the flaw in their scheme is that these also have to made available to everyone – if only they knew about them.
The CB has a fair idea why so few people switch plan. Renewal notices don’t stress ‘the importance of contacting their insurer to ensure that they are being offered the most suitable policy to meet their needs’ the CB warns.
Particularly damning is how the industry gets away with ‘auto renewals’ where a very important decision is automatically made for you.
But after this inspection, the CB will require providers to enhance renewal notices to ‘clearly explain to consumers that their policy will auto-renew if they do not contact their insurer’.
Insurers should also ‘encourage consumers to make contact (and assess) if there are more suitable policies available’.
‘This is a wake-up call for health insurers to focus more on reviewing cover each year,’ says Dermot Goode, of totalhealthcover.ie.
‘(Renewal notices) should include a specific recommendation to contact the insurer directly prior to renewal to see if any lower cost equivalent plan exists,’ says Mr Goode.
Buying or renewing cover online is not advisable. Despite the huge cost-saving benefits of online sales to insurers, most fail to offer an acceptable service.
‘Providers collect less information from consumers buying online prior to making recommendations, compared to face-to-face or telephone-based sales,’ the CB warns in its report.
‘Three providers’ websites, when recommending a policy, do not offer policies from their full range of available policies.’
The CB doesn’t name the culprits but it is taking them to task on the issue. This is important because these firms seem to be failing to fulfil even their minimal obligations as ‘tied agentstyle’ advisers who represent only one company, which is to let their clients see all the plans they can buy.
Mr Goode explains: ‘Where a health insurer does not have all plans available on its websites, there should be a clear warning on the quotation page highlighting this, along with contact numbers for customer service operators.
‘I always advise against buying health insurance online as you’re accepting responsibility for reading and understanding all of the material and therefore you have no comeback if the final product doesn’t meet your exact requirements.
‘As the Central Bank has highlighted, you may also be missing out on better value products that are not available online.’
He advises consumers not to ask for a recommendation on any policy, but instead challenge the salesperson to find you ‘the closet equivalent plan to what you currently have in place, but at a lower cost’.
The CB is well used to policing investment advisers and it’s now simply applying the same standards to health insurers, who must provide full and fair information about the products they sell. The move is very welcome. Having the best health cover you can afford is really important and more significant financially to most families than investments. So it’s about time they received the same protections that investors have enjoyed for years.