Norwich Union advice on healthcare

For UK customers only

1. Age-related premium increases

Why do private medical insurance premiums rise so steeply as you get older?

How can insurers justify these increases at the very time when people need their insurance most?

• It is an industrywide issue and insurers are constantly looking at how to address it.
• We don't like having to impose heavy age-related rises any more than our customers like having to pay them.
• The insurance industry faces exactly the same medical inflationary pressures as the NHS: the constant introduction of new, often expensive treatments and drugs and resulting increase in demand; increase in awareness amongst people and resulting increase in demand - the NHS responds by rationing, we have to reflect the inflation plus increasing claims levels in our premiums.
• It is an an inevitable fact that as people get older they are more likely to become ill and therefore more likely to claim. Therefore, this increased risk is reflected in the premium they pay as with any insurance.
• We now do everything we can to ensure people are aware of likely increases from the time they take out their policy - improved, clearer literature, plus the introduction on some policies of single-year age bands which help people know what to expect.
• Some people who have had policies for some years may suffer from the fact that communication about premiums was not so good when they first became customers - there have been considerable improvements in customer communication over the past few years.
• We are trying to simplify product ranges to make choices clearer.
• We do everything we can to help people who hit this problem when they get older and contact us to say they feel they can no longer afford PMI although they don't want to lose it - discussing the possibility of larger excesses on their policy, or adopting a six-week option, or trading down to a budget policy or Trust Care - we have had a significant level of success with this approach.
• Innovation in products to address the issue - the onus is on the industry to innovate, to try and offer PMI in different ways to help people get the kind of cover they need at a price they can afford.

2. General premium increases

Why do PMI premiums seem to rise so frequently and so significantly?

Why don't you offer a no-claims bonus to help keep premium increases down?

• We do not want to upset our policyholders by increasing our premiums unnecessarily. We want our customers to renew their policies year after year. What we are faced with is medical inflation - increased hospital charges, increased cost of drugs, ever improving technology which is increasingly expensive but offering improved patient care.
• Unlike in the NHS where the Chancellor of the Exchequer has access to ways of raising revenue, the private sector has a precise budget. The money available comes from premiums and self-paying patients. We do not want to prevent our customers from having the best possible treatment at the leading-edge of medical science and technology. But there is a cost to this.
• Older people, statistics show, are more likely to claim than younger ones. We are living longer which means there is a greater chance that healthcare cover will be used. Technology is improving all the time and even more conditions can be treated, which means even more claims are made.
• Norwich Union Healthcare does not offer no claims bonuses because we do not want to discourage our customers from having treatment when they are in need of it. We want them to be fit and healthy.
• Treatments are expensive, even the standard procedures can run into thousands of pounds. Medicine is expensive.

3. Policy exclusions

Why are things like pre-existing conditions and chronic conditions excluded from PMI cover?

Why do you keep getting complaints from people who don't realise their conditions are covered until the point of claim?

• Most policies will not fund treatment for pre-existing conditions, where a customer has had a condition before the insurance was taken out, although with some types of policy cover will be reinstated after a fixed period of time without treatment.
• Other common exclusions include chronic conditions - illnesses which are long term and where continued treatment is not going to lead to a chance of substantial improvement - as well as cosmetic and infertility treatment and normal pregnancy.
• Norwich Union Healthcare, like the vast majority of other private medical insurers, also excludes treatment resulting from alcohol and other forms of self-abuse such as drugs, from its policy cover. This is always made clear in the policy documents that customers receive so that they know what to expect. Most of these exclusions have been a feature of private medical insurance for many years. This is largely because health insurers tend to focus on reducing risk rather than loading premiums.
• The vast majority of claims are met and paid by medical insurers, for many tens of thousands of people every year. Norwich Union Healthcare meet about 96 per cent of claims.
• We do our best to make sure people know what is and is not covered when they take out insurance and to help them choose the most appropriate product for them, but it is also important that they decide what they want from their policy and make sure themselves that they are getting the cover they need.

4. Self-pay

Isn't it cheaper for people just to save their premiums and pay for treatment as and when they need it, rather than to pay out premiums for something they may never need?

• PMI is like any other insurance - you may pay car or household insurance premiums for many years and never claim, yet everyone accepts it is necessary. Like any insurance, PMI is there to cover the unforseeable.
• Saving your premiums will not help if you have to claim - as a significant number of people do - within the first few months or years of taking out your policy, expecially if your operation or treatment is expensive. Some relatively common operations can cost thousands of pounds.

5. Policy wording

How do you help customers to understand what their PMI policy covers?

• Selling what are relatively complex products, Norwich Union Healthcare makes every effort to produce policy wordings that are as simple as possible while forming a legal contract.
  
  We will continue to simplify wording and to explore ways of putting across essential information in easy-to-understand language.
• To help our customers we were the forerunners in setting up a Helpline operated by well-trained staff to answer queries and reassure customers who have anxieties about their policies.

6. Complaints

How do you deal with complaints, and what do you do to try and avoid them arising?

• Complaints are inevitable when consumers are encouraged to voice their concerns. Norwich Union Healthcare is fully committed to the ABI code of conduct and is a member of the General Insurance Standards Council for its private medical insurance business. We also subscribe to the Financial Ombudsman Service for both our private medical and income protection customers.
  
  We firmly believe that our association with these independent adjudicators is a very important and necessary commitment to providing a quality service to our customers.
• Norwich Union Healthcare is committed to ensuring that our customers are given as much information as possible, in simple language, to ensure they understand their policies and what their cover is. We were the first private medical insurance company to set up a Helpline and now we have a simplified claims system that enables many claims to be resolved in less than 15 minutes on the telephone, doing away with a lengthy claim form process.

7. Litigation

With the ever-increasing occurrence of litigation with medicine, what can and do you do to ensure high standards of healthcare for your customers?

• Norwich Union Healthcare operates managed-care programmes working with hospitals, doctors and other healthcare professionals where quality is a major criterion.
• We do not interfere in the doctor/patient relationship. Referral is still determined by the GP, and treatment by the specialist. Norwich Union Healthcare would not seek to interfere in clinical decisions. However, as funders, we have the right to know in the interests of our patients what we are paying for.
• "Defensive medicine" encouraged by the threat of litigation is a major issue and cost to the healthcare system in America - this must be avoided in the UK.

8. Regulation

What is your attitude to regulation of healthcare business?

• We already treat our private medical insurance and income protection products as if they are regulated. Adhering to guidelines, monitoring activity, maintaining quality and delivering sound advice are fundamental to the success of our business.
• As well as being a member of the ABI and fully committed to its Code of Conduct, Norwich Union Healthcare is also a member of the General Insurance Standards Council for its private medical insurance business. Our association with these regulatory bodies is a very important and necessary commitment to providing a quality service to our customers.

9. Public/private partnership

What potential is there for the private healthcare sector to work with the NHS?

• We believe strongly that there is potential for a mutually beneficial relationship between the public and private healthcare sectors, making optimum use of their complementary strengths, as exists in other countries. It is unrealistic to expect more public money to be put into the NHS, yet if we want better healthcare and health outcomes, more money must be found. Given the constraints on public finance the private sector is the only answer.
• We welcome, and take, every opportunity to discuss and debate this issue with representatives of all political parties.
• Since being established in 1990, Norwich Union Healthcare has always been committed to co-operating and working consistently with the NHS.
• An example of this is Trust Care, a private medical insurance policy specifically designed by Norwich Union Healthcare to enable people to have treatment in NHS private units. This was developed in 1993 after close consultation with the NHS.
• Encouraging private unit development is a practical way of enabling funds to be channelled back into public services.
• One of our key objectives for 2001 is to help hospitals with their marketing plans and business development plans.
• In 1995 we published a report on pay-beds by NERA (National Economic Research Associates). Research examined whether the NHS benefits financially from treating private patients. Our report demonstrated that NHS hospitals do benefit from their private patient units. Allowing for all hidden costs, the benefit to the NHS was on average £235 per patient.
• A further step in our drive for co-operation between the NHS and the private sector has been our work with the Southampton and South West Hampshire Health Commission. Together we submitted the winning entry in the NHS Executive 4P Award Scheme - Public Private Partnership in Purchasing, with a project aimed to improve patient services by developing fundholding management skills using private sector expertise.

10. Preferred providers

Do you operate a hospital network?

• Norwich Union Healthcare has a preferred provider agreement with Nuffield Hospitals for healthcare services at its 40 independent hospitals around the country. This gives better value for money for our customers by ensuring lower treatment costs and hence lower premiums.
• Our link up with Nuffield Hospitals, which have 1,626 patient beds nationwide, was the first step in our strategy to develop a preferred provider network, which combines clinical excellence with cost savings and can only benefit our customers. This has been developed further with an extended network on our Fair + Square product. Here the network includes Nuffield, BMI and Community together with a number of BUPA hospitals.

11. Complementary medicine

What cover do you offer for complementary therapies? Why don't you cover a broader range of complementary therapies?

• Under those NUHC policies which include outpatient cover - ie Premier Care, Express Care, Select Care, Trust Care and Fair + Square - you will usually be covered for osteopathy, chiropractic and possibly some other complementary therapies eg acupuncture, but only if you are referred by a specialist (ie a consultant, not a GP) who is recognised by us except under Fair + Square, which allows GP referral for osteopathy and chiropractic up to a maximum of 10 sessions per year.
• Some corporate schemes will allow you to be referred for
• osteopathy or chiropractic by your GP for a limited number of
• sessions, but not for other complementary therapies.
• We take this stance because:
  • a lot of complementary therapy is not short-term treatment of acute illness, and often tends to involve repeated sessions over long periods of time
  • although some complementary therapies may appear completely sound, there is very little clinical evidence that they are effective, and we would require more before endorsing them
  • practitioners are often not subject to the same regulations as regular clinicians and anyone can set themselves up to carry out treatment
  • chiropractic and osteopathy however are covered by some of the better-recognised professional bodies
• We continue to monitor developments in this area closely, in terms of both clinical development and consumer demand, and will make future adjustments as appropriate.
• It is also worth mentioning that there has been a significant increase in claims for osteopathy and chiropractic over the past few years eg in 1997/98 they rose by more than one third over the previous year.
• This is for three reasons:
  1. more doctors recognise the benefits of these treatments and are prepared to refer, and more patients are aware of the benefits and therefore want to take advantage of them
  2. we have responded to this by adding cover for osteo and chiro to more policies
  3. we have been cautious about some complementary therapies for the reasons mentioned above, but professional standards in osteo and chiro have developed considerably in recent years

12. Income protection

Where does income protection sit within the market place of other protection products?

How does it work?

What are the key issues for people considering taking it out?

What are the most common causes of claim?

• Income protection pays your salary up to the insured level of benefit if you are unable to work through accident or illness. Instead of paying just one regular bill for a limited time - as with payment protection insurance - or giving a one-off lump sum - as with critical illness - IP pays a monthly sum to cover all your living expenses for as long as you are unable to work, if necessary until your chosen retirement age.
• You choose the amount to be insured (up to 60 per cent of your salary), the deferred period (ie the period between claim and payment of benefit - eg 13 weeks, which you might select if your employer pays sickness benefit for that period), and retirement age (up to 65) - the premium will vary according to these elements. If you have to stop work because of an accident or illness you will receive the appropriate benefit until you can work again. We will help with rehabilitation/private treatment/retraining where appropriate to help you get back to work.
• What to consider when choosing an income protection policy:
  • check the definition of "disability" on the policy
  • be clear on the type of policy you are buying, and therefore the amount by which premiums will rise in the future
  • find out whether the insured amount is calculated with or without deduction of state benefits
  • ensure the policy offers all the benefits you need, and that you are not paying for benefits you don't need
  • ask if there is a surrender/maturity value
  • check what happens if you become unemployed
  • when you become ill your income protection does not kick in immediately - so find out how long it is before you can start claiming
  • compare premiums and benefits on two or three policies before making a final decision
• We have about 1,000 new IP claims per year, of which about 300 are for mental illness, a category which includes stress - we are currently working on breaking that down so that we can say exactly how many are stress.
  
  The number of mental health-related claims has risen steadily over the past 10 years.
  
  It is prevalent among non-manual workers, most significantly teachers.
  
  To reflect this, teachers taking out an IP policy with us now have a choice of cover either excluding or including stress-related illness, so that they can if they wish opt to keep the cost down by excluding stress.
  
  We will do what we can to help people recover from stress-related illness and get back to work - this will always be in consultation with their GP or specialist - eg if they recommend a certain form of treatment or counselling we may well fund this privately to speed recovery.