In the new world, we can buy products in the same time it used to take waiting on the phone to speak to a sales representative. We avoid the queues, we avoid the hassle and many a time, we avoid buying a product of quality.
Purchasing an insurance product is different from purchasing a pair of trainers. A size 8 shoe fits a size 8 foot.
Purchasing a car insurance policy, is different from purchasing a private medical insurance policy. With car insurance, comprehensive cover means, if it is my fault, then I am covered – and it is that simple.
There has been a huge surge in online purchases made over the internet in the past two decades. Comparison websites such as Skyscanner and AirBnB have all but eliminated the previous market leaders: Travel agents & teletext.
However, even with the increase in purchases made online, private medical insurance brokers have managed to stay alive, albeit with their inability to adapt to a rapidly changing market and failing to embrace technology as it develops.
We believe this to be a result of one main factor:
The lack of satisfaction at point of claim.
We decided to undertake our own experiment and see just how easy it was to purchase a private medical insurance policy online. It was unbelievably simple and in our opinion, extremely irresponsible.
My name was John Jones, born in January 1960 and I smoke.
I was able to obtain basic cover from £44 per month. I decided to go with the insurer on the list who I recognised, at £63 per month. I did this because I felt more comfortable with their brand name. This policy did not cover treatment, but ticked the boxes of diagnostics and cancer cover and had no excess. I then clicked more details and found out that my cancer cover was actually only for diagnostics. So the cancer cover that was ticked, actually should have been a cross. This policy covered me up to the point of knowing that I have cancer.
However the element that we want to focus on is the underwriting terms that are available to online purchasers.
All policies, from the cheapest, through to the most expensive, only offer moratorium underwriting. This is because it would allow you to purchase your policy there and then, only answering a few questions.
So how accessible is it to find out exactly what moratorium underwriting is?
Well, it was not available on the home screen, I had to click ‘more details’, then click the Key Facts link and then go to Page 12 of the 16 page PDF about the product.
This is not quality, this is accessibility.
Comparison websites have improved the ability to purchase, but have highly reduced the ability to purchase a quality product and allow consumers to understand the product they are purchasing. In fact, I think they have made it harder and more tedious to find out the only information that actually matters. Paying £44 per month for a product that offers me very little benefit for the £528 a year is a pointless exercise. I would rather use the NHS and avoid the hassle and save the money.
We have been adamant supporters of advising our clients to fully medically underwrite their policy i.e. disclose their previous illnesses and conditions, and understand exactly what they are covered for at outset. This ensures that the claims procedure is quicker, ensures that no customer is unclear about what conditions they are covered and provides them with the ability to transfer their existing underwriting to alternative insurers in the future.
The question is, then why do people use moratorium underwriting?
Moratorium underwriting can be very effective, but when all the risks are clearly explained.
It is very simple to complete an application, and no previous medical records need to be disclosed prior to obtaining cover. Furthermore, on a ‘2 year moratorium’, which is the most common form, providing that no treatment, symptoms or consultations have occurred for two years after the policy is taking out, pre-existing conditions that existed in the previous 5 years would be covered going forward. These conditions are likely to have been excluded under a Full Medical Underwriting.
However, fast forward a few years, at every point of claim, the Insurer is likely to ask for medical records and assess whether or not this was a pre-existing condition. It is also non-explicit in terms of whether a new condition has evolved form a pre-existing condition.
It is important to note the benefits and weaknesses of underwriting definitions and policy benefits. However, we believe that there will always be a requirement for advisers like Vintage, to provide expertise in an environment that provides accessibility to products, but lacks the quality to deliver positive outcomes.