Industry codes play an important role in ensuring consumers get a fair deal.
The Health Funds Association first adopted an industry code 26 years ago in July 1992, and the Insurance Council also has one of long standing. It is good to see the Financial Services Council adopt its own, so now life insurance will be governed by one, to come into effect on January 1, 2019.
HFANZ members process over a million claims a year from about 500,000 individuals. More than 95 percent are approved and just a tiny fraction of those declined are disputed. Most disputes are sorted ahead of time and do not need to be referred to the Insurance and Financial Services Ombudsman, the principal dispute resolution body to which health insurers in New Zealand belong. IFSO can take into account an industry code in looking at a complaint, and can hear cases up to $200,000.
Latest figures from Ombudsman Karen Stevens show that in the year to the end of June 2018, just 36 of the 320 complaints to her office were regarding health insurance and none was upheld. Health insurance also made up just 153 of the 3357 complaint enquiries received. Most of the 36 complaints were regarding policy exclusions, issues of non-disclosure, the scope of cover, and pre-existing conditions. Twenty-eight were not upheld, seven were settled between the consumer and the insurer, and just one was partially upheld. Arguably, even one out of over one million is one too many. But this shows health insurance is far from the Wild West.
Part of the reason why there is such a low level of complaints going through to the Ombudsman is that our code has been in effect for so long. Its key tenets are that health insurers which are HFANZ members will act in good faith and deal fairly with customers.
Fair treatment encompasses several dimensions, including:
Prompt assessment and processing of claims. Most health insurers have some form of pre-approvals process which confirms the claim for treatment will be paid. The speed of access to health treatment is part of the value proposition of health insurance, so delays in claim processing are rare
Provision of clear and accurate information to customers and prospective customers
Not engaging in any misleading selling of product – either directly or through intermediaries
Treating customers’ personal and health information with care and in accordance with privacy requirements
Ensuring there are adequate internal dispute resolution procedures in the event of a dispute.
HFANZ members monitor customer satisfaction and have noted the experience for most health insurance claimants is very positive. Given the huge number of claims paid annually, the incidence of customer dissatisfaction in relation to health insurance is extremely low.
The Government’s current review of insurance contract law, being conducted by the Ministry of Business, Innovation and Employment, is also considering issues around insurer conduct, treatment of non-disclosure, and unfair contract terms. HFANZ has welcomed this review and is hoping that some of the practices around good faith and dealing fairly with customers are reflected in any proposed changes.
A copy of the HFANZ Health Insurance Industry Code can be found HERE.