Consumers cancel policies because insurers ‘won’t explain deals’

THE sheer complexity of health insurance policies is forcing people who could afford to keep their coverage to quit because hidden deals are not being adequately explained by insurers.

Consumer Association of Ireland chief executive, Dermot Jewell, said the situation is locking the sector into a vicious circle where the cheapest options are rarely emphasised in an attempt to ensure income remains high.

This then results in customers choosing to cancel their coverage for cost reasons, which the consumer watchdog said will ironically lower insurers’ income levels anyway.

“[Not explaining the best deals] is a disincentive, but I don’t think the penny has dropped with them yet,” Mr Jewell warned.

“We receive a significant number of enquiries from people who complain about deals not being explained. And there’s no question, with the change in the market the terms and conditions have become a lot more convoluted. You can get a policy to cover nearly every medical treatment you think you need, but it can be very far away from what you should really want, and that is not always being explained,” he said.

Among the key issues which consistently catch customers out is the lack of flexibility on certain private health insurance contracts.

While Aviva Health Insurance and Quinn Healthcare allow customers to change their policies halfway through the year in the event of a work or illness circumstance, VHI does not.

In addition, both Aviva and VHI have a list of “restricted illnesses” where the private company will not pay the full cost of a procedure — leaving the individual involved with the potential for an unexpected bill to pay.

Of the 3,780 upheld complaints received by the Financial Ombudsman’s office in the first half of last year, just under one in four (24%) related to the health, motor and household insurance. This figure is up 5% on the 19% of total upheld complaints in the second half of 2010.

According to the Health Information Authority, an average of 6,000 people are quitting or failing to renew their private health insurance coverage every month.

Between January and September last year, 53,000 people left the market.

This was mainly due to the rising premium costs put forward by all three of the private health insurers operating in Ireland.

The HIA figures show that at the start of this year 2.2 million were still signed up to private health insurance in this country.

However, independent experts have said as many as 100,000 more people could quit their coverage by the end of this year due to mounting financial pressures.