The insurer has launched the new Real Health product, which introduces the new half-a-million-dollar limit on surgical and non-surgical treatments, including new generation, non-Pharmac treatments for cancer.
Claire Matthews, of Massey University, said AIA would likely only have to pay out to the $500,000 level for a very small number of people. “They can offer it because the number that is going to that limit isn’t huge.”
She said a key factor in the product's success would be the affordability of premiums. New Zealanders are hesitant about taking out medical insurance anyway, so may need even more convincing to take out a product that covers something so rare.
AIA said a non-smoking 40-year-old female with a base plan and $500 excess would pay a total premium of $66.89 a month.
Peter Tynan, chief executive of Southern Cross Health Society, said it hadn’t had any customers claim more than $150,000 in the past 12 months. It offers an UltraCare policy with unlimited cover for surgery and $60,000 per claims year for cancer care, including $10,000 for non-Pharmac chemotherapy drugs.
Insurance commentator Russell Hutchinson agreed it was not likely that AIA would receive many $500,000 claims.
“It’s one of those things. Just because it isn’t likely doesn’t mean it isn’t useful. It’s helpful if you are worried you might be one of the unlucky ones which is what insurance is all about.”
He said it used to be suggested that consumers would never claim up to a $100,00 or $200,000 policy limit but now it is not uncommon to hear of $100,000 procedures. “This is what insurance is for. It shouldn’t have an upper limit, or it should be reassuringly high.”
The limit had a small impact on product ratings, he said.
AIA chief executive Natalie Cameron said she was happy to accept criticism for having high limits that would not be used frequently yet.
“The Real Health policy is a competitively priced product that protects policyholders into the future, where some of our competitors have, in my view, too limited levels of cover for critical things like cancer treatment.”
She said the higher limit would future-proof the policy in anticipation of increasing medical costs. “The one thing we can predict is that medical costs will continue to inflate rapidly, meaning while we may not immediately receive claims at that level, it is already a possibility with some of the new autoimmune drugs being approved for NZ, and we expect to be using that limit in years to come. There is a significant pipeline of new drugs in the works, and while they may save your life, they will only do it if you can afford them.”
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