The current subject on brokers' lips is PMI claims transparency, yet this was banned from discussion at a recent AMII meeting. In the absence of proper debate, Insurance Age's Liz McMahon brings viewpoints together
Over recent years, the debate over claims data sharing in the private medical insurance (PMI) sector has never been off the table. However, rather than everyone breaking bread, the debate has been hit by famine.
The situation is now at the point where, in order for healthcare insurers to even entertain sitting down together, the subject of claims data sharing must be completely absent from the agenda.
The absurdity of this situation became clear when the Association of Medical Insurance Intermediaries (AMII) requested its brokers submit potential topics for discussion. Claims data sharing came out as the main topic they wanted to hear discussed.
PMI insurers may be refusing to discuss claims data sharing with each other, but that does not mean it is not a pertinent issue for all involved. Why are insurers so reluctant to share data with their clients and, if this embargo persists, will the regulator be compelled to step in?
Head of technical support at the British Insurance Brokers’ Association (Biba), Peter Staddon, asks: “What have certain insurers got to hide? Are they making too much money? I don’t think that’s the case but there’s a school of thought that would disagree with me.”
Ian Talbot, head of intermediary distribution at National Friendly, believes the big insurers are afraid of competitors ‘cherry picking’ and use this as a defence for not backing the move. He continues: “There is always the risk of losing well-performing schemes - it is a competitive market and this is what happens in other areas of insurance, so why should it be any different with health insurance?”
In response, a spokesperson from Axa PPP remains resolute, saying: “Our understanding is that our approach reflects widespread practice in the market, and we have no plans to change it.”
The frustration around this attitude is that insurers sitting in the middle are happy to change how they operate. Jack Briggs, intermediary sales and marketing director at Simplyhealth, says: “The market leader and the number two in the market do not wish to share claims data, believing that they would be placed at a competitive disadvantage were they to do so, and they are quite entitled to take that position.
“Were they to change that position and the rest of the market were to follow their lead, Simplyhealth would be happy to follow the market.”
Wait and see
But Alistair Sclare, head of healthcare at Groupama is aggravated by this ‘wait and see’ philosophy. He says: “I find it quite bizarre. One of the reasons why we are campaigning for transparency as strongly as we are is because we do not see why customers should be penalised and not rewarded.”
He continues to explain, as he sees it, the merits of sharing claims data: “We can base our price partially on the basis of that claims experience as you would with any other class of insurance. In the absence of that information, we are unable to do that.”
Talbot puts his weight behind this argument: “If a competitor is quoting on a new scheme and they cannot see the full claims history for that company, they cannot possibly price it fairly for the customer.”
A fundamental problem with the current situation is the ambiguity that exists between experience-rated claims and age or community-rated claims. Mike Izzard, chairman of AMII, explains: “It is currently possible to have a 60-70-member flat rate scheme that has been underwritten for the group based on experience where information is shared. However, if a 50-man scheme is age rated, the claims information isn’t shared. It’s complete nonsense.”
Sclare follows this by highlighting how unaware customers are of the differentiation between these policies: “A group of say 75 members may be able to obtain an experience rated quote and a small to medium enterprise (SME) quote. If it picks one, the claims information will be released, if it picks the other, it won’t. But the holder has no idea of that fact at the time of purchase.”
Another bugbear within PMI circles is, rather than flatly refusing to share data, insurers have been accused of picking and choosing when to divulge information. “At the moment, certain brokers do get approximate or partial data information on schemes and others do not. Some AMII members enjoy disclosure purely because insurers know some will not use that information selectively against them,” says Izzard.
Talbot adds: “This practice has sparked speculation that availability of claims data is purely down to the insurer/broker relationship and this does not seem a fair way to conduct business.”
While no one appears particularly keen, in the absence of an open dialogue, intervention from the regulator has been suggested as the next step.
Sclare says: “I think it is generally a black and white argument. In the event that our competitors won’t see sense, they are the ones that stand to lose most if the regulator has to step in.”
But Fiona Harris, head of pricing, strategy and development at Bupa UK Membership, does not share Sclare’s sense of foreboding: “SME PMI is already regulated in many ways. Bupa across the world works in a range of regulated environments and we welcome regulation that supports the customer and promotes excellence in the PMI market.” Does this confidence come from the (perhaps misguided) belief that it will never reach this stage? Izzard certainly wants to steer the argument away from regulation.
“Shouting, screaming and beating insurers around the head with compliance won’t work. Success needs to be achieved by negotiation and persuasion.” Izzard harbours cautious hope for the future: “My aim is for us to become comfortable in each other’s company and to trust one another. Then who knows? In two or three years we may be able to transfer back to more controversial topics.”
It is doubtful whether this long-term strategy will satisfy everyone. Refusing to tackle the issue of claims data sharing, which is evidently at the top of so many agendas, may force certain parties to look beyond AMII and Biba for a solution.
This feature is courtesy of Incisive Media’s Insurance Age magazine
