Travel insurance is a product known to create a lot of complaints – to regulators, but often in the media and in social media as well – possibly creating consumer confidence issues, which have regulators taking a closer look at the product and the processes used in selling it.Although life insurance advisors often don’t sell the product in its most common forms, those involved in the review suggest advisors have a stewardship role to play in educating consumers, to help preserve the industry’s larger brand.
If that role means you’ve already been in a position to talk about travel insurance with clients, and their experiences are notable or worthy of consideration, the Canadian Council of Insurance Regulators (CCIR) is seeking input from the public, to find out how the business is conducted in Canada.
“Our intention is to hear from the public about their concerns,” says Carolyn Rogers, CEO and superintendent with FICOM (the British Columbia Financial Institutions Commission), and vice chair of the CCIR. “This is a product which generates more complaints from consumers than other products. You can have an increase in complaints (that is) not necessarily an indication of systemic issues. But when those complaints seem to have a consistent theme, that indicates there may be a systemic issue.”
Public comments to the review are being accepted by email at [email protected]. The council’s working group expects to release its first report in the fall.
In the meantime, a Canadian Life and Health Insurance Association (CLHIA) temporary working group of senior executives has convened to work with CCIR’s review. This is in addition to a regular committee, in place for years, which looks at harmonizing client-facing forms, industry best practices, and clear communication.
Consumers seem to not understand the coverage they’ve bought, and there are too many times where the consumers seem surprised about the outcome. It’s important that we gather the facts.
– Carolyn Rogers
Beginning in 2016, for example, Alex Bittner, president of the Travel Health Insurance Association of Canada (THIA), says companies will implement standard contract language, disclaimers, and definitions, after these measures were unanimously approved back in September 2014.
In general, the regulator’s current review would appear to address a rather significant gap in between public perception about the product and its reliability, and the industry’s view that most claims are paid out, almost without hesitation.
“Insurers don’t make decisions lightly when the client claims,” says Stephen Frank, CLHIA’s vice president of policy development and health. “Behind every one of these news stories, there’s (likely) another context that can be very hard to communicate.”
Still, despite this, and the statistics which provide support – according to Bittner, a KPMG survey of insurers, commissioned by THIA, found over 95% of travel health insurance claims are paid out by the companies – it’s not at all difficult to find heart-wrenching stories about families facing bankruptcy after being denied claims for U.S. healthcare, or about seniors who’ve misunderstood their policies.
In the face of this anecdotal evidence however, statistics, strangely, do not appear to have a lot of clout. Occasionally, when these are pulled out in response to the suggestion that insurance carriers deal unfairly with consumers, use of those statistics can even appear disingenuous at times, particularly when they’re lined up alongside the anecdotal stories.
While client misunderstanding about their coverage and what it will provide is part of the problem, at issue too, are common complaints about stability periods, and pre-existing condition definitions which may or may not include “investigative testing.” Examples suggest, fairly or not, that having a blood pressure check can be enough to deny blood-pressure related claims, if a client falls ill outside of Canada. Changes in medication too, are often enough to reset the stability period clock – meaning the client must wait anywhere from three months to a year, depending on their age, before they would be eligible for coverage using a general travel policy.
While the travel insurance industry is doing work to make sure clients remember to take appropriate claims information and contact phone numbers with them when they travel, other education would also appear to be necessary. Fine print details can mean those with 30-days of coverage, may not be eligible for that coverage at all, if they plan to stay longer, and haven’t purchased top-up coverage. Confusion about pre-existing condition clauses is another consistent theme reported to the CCIR by member regulators.
“Every member of the CCIR identify this as something we should spend resources on,” Rogers says. “Consumers seem to not understand the coverage they’ve bought, and there are too many times where the consumers seem surprised about the outcome. It’s important that we gather the facts.”
The review will include a look at product design and the sales process – the product is often sold through exempt channels attached to other products like credit cards or association memberships.
“We have not formed a view on the issues,” she adds. “This is why we have phase one (the invitation to submit comments).We have anecdotal evidence and the headlines, but that’s not something you can regulate on.”
Next steps of that process will be to publish comments, and perhaps pose questions, in a discussion paper, due out this fall.
As for the advisor’s stewardship role, Frank says “everyone has a role in helping to make sure people understand what they’ve bought, and have confidence in what they’ve bought.” Both Frank and Rogers agree perception problems, left unchecked, can have a detrimental effect in other lines of business, as well.
“Our ultimate goal,” Frank says, “is to have a product Canadians are confident about. Our hope is that we can get some insight into whether there’s a gap there or not, and find ways to address it.”
Consumer trust, consumer protection
Ensuring a client’s ongoing confidence in their travel insurance product requires an effort at education. Even if it is not part of your standard offering, in some cases, particularly as clients get older, it’s possible you will need to become involved in providing travel coverage. This is because many generic plans won’t actually meet an aging client’s needs, or the needs of those – stable or not – who have more complex medical histories.
As with other health insurance products, honesty on the client’s part when applying for insurance is important to ensure coverage if a claim is made against the policy.
Perhaps problematic though, are a client’s own subjective opinions about their health. Although industry representatives say companies are getting more stringent about training anyone who has contact with clients, the fact policies are issued without any great medical investigation, or even probing questions in some cases, could be part of the problem as well.
In addition to those who don’t understand that a simple change in medication can affect their eligibility, Alex Bittner, president of the Travel Health Insurance Association of Canada (THIA), says there is also a small segment of the population who will willfully misunderstand their policies, and some who will actually admit to lying on applications to obtain lower rates.
“There is still a segment out there that don’t get it. When they buy travel insurance, it’s emergency health coverage. It’s not designed for anything but an emergency,” he says. “People need to understand their policy, they need to understand their health, and they need to understand the trip. Those are essentially the three pillars we look at.”
“We do want to (cover) things like pre-existing conditions,” he adds, “but we need to know the risk. If we ask the appropriate questions, we need the appropriate answers.”
He says a survey of consumers done by the THIA, found 14% admitted to intentionally making a mistake. Half of those then admitted to making misstatements on their medical questionnaires to get a less expensive premium – possibly without any awareness that such moves are grounds for claims denial.
Bittner compares the client conversations to similar conversations which occur when drivers insurance is obtained: “I can tell you I’m a great driver. Quite frankly though, that conversation is immaterial. You’re going to take the information I give you, put it into the system and get a driver’s abstract. We don’t have that protection in travel health insurance. We take the consumer’s word for it, which makes the medical questionnaire that much more important.”
Other recommendations for clients:
- Understand that coverage is for emergencies only, and that it is necessary to provide appropriate medical information so insurers know what risks they’re covering. (Not disclosing those risks often means they will not be covered.
- Know your policy. Buy it sooner than the eve of travel. Just because you can buy it this way, does not always mean you should. (Read the fine print and understand any conditions or exclusions.)
- Take your time, and fill out forms correctly and honestly. Review every section, particularly departure and return dates.
- For existing policies, ensure there are no rules for departure or additional coverage which could affect existing coverage.
- Carry your travel assistance phone numbers and your policy number for assistance.