Unsatisfactory health insurance practices

Age Concern New Zealand is concerned about unsatisfactory practices relating to health insurance for people over 65 including recent health insurance premium increases.  

Roger Styles
Executive Director
Health Funds Association of New Zealand
WELLINGTON
18 November 2009

Following the recent major hike in Southern Cross premiums, Age Concern began looking into the practices of Health Insurance companies in relation to older people.  Our enquiry covered general areas of health insurance, such as comparative premium levels, information provided to customers/potential customers, claims, and customer services in general.  We gathered our information from a variety of sources, including the major insurance companies and brokers, consumer organisations and articles, online articles and data and, not least, anecdotal information from older people holding health insurance policies.

The major issues emerging from our enquiry fall into three main categories: premium levels, accessibility of relevant information and customer service.

1    Premium Levels

Given the comparatively low income of superannuitants, their health insurance premiums are increasing at a highly inequitable rate and way beyond the means of many.   Health insurance is only one aspect of their health costs, which in total are taking up more and more of their limited income.  It is now the time for companies to carefully examine ways in which they can ease this burden for their clients.

It is reassuring to know from your Annual Report that your organisation continues to support the proposal for significant Government subsidies on premiums for those over 65 years.  This implies HFANZ’s recognition of the inequity that exists.  We would like to see the establishment of practices compliant with such cognizance.  Insurance companies could begin by exploring ways in which they can complement subsidy proposals by improving their own services to older people in the form of rebates, rewards and other health-related benefits.

Our enquiries have indicated that information on age-band related increases is often elusive.  Although companies may not be able to offer an accurate forecast of premium increases due to the variables involved, they should be in a position to present an approximate indication of future increases to their clients. Many clients are shocked by massive increases, invariably communicated to them via a formal letter with little or no prior warning. Several recipients have reported that these letters have been upsetting and stressful for themselves and their families. Where unexpectedly high increases occur, a representative should be proactively contacting the client to discuss both the reason for the increase and their options rather than merely informing them in writing.

Many policyholders are convinced that their premium has been significantly increased following a major claim, yet insurance companies state that claims do not directly affect a client's premiums. This point needs to be clarified and the facts communicated to clients. We believe a full explanation of any imminent increases should be mandatory.

2     Information

Anecdotal information indicates that many clients are not clear on the conditions of their cover. Fine print continues to present a problem, especially for the elderly who invariably have impaired vision. Company representatives need to be more proactive in providing clear, accessible and comprehensive information, especially on such aspects as the longer-term financial commitment and the terms of cover, rather than only answering the questions asked. This would ensure that clients are aware of their rights as well as their obligations if they make a claim. In several cases, they were not aware that the excess on their insurance applied only once in a given year.

This kind of information can be essential with regard to decisions on the timing of elective surgery.

3     Customer Service

Customer services need to include checking in with clients at appropriate intervals to assess their cover and answer questions that may have arisen. In this age of the Internet, many older people are marginalised in terms of communication and receiving personalised service and many lose sight of the parameters of their insurance cover. Other marginalisation processes that invariably accompany old age tend to lead to reduced confidence and a need for more direct and personalized support. Occasional home visits where appropriate, and especially where change is involved, should be offered just as occur when a representative is recruiting a client.

Age Concern New Zealand asks that you respond positively to the issues we have raised and you seek the immediate assistance of your member Health Insurance providers.

Yours sincerely

Ann Martin
Chief Executive
Age Concern New Zealand

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