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Providers need to do the right thing when nobody is watching

A meme floating around says, "Integrity is doing the right thing; even when no-one is looking."

Thursday, September 21st 2023, 6:00AM

by Jon-Paul Hale

This story is about a provider who didn't do the right thing while no-one was looking.

As I have stated before, and I'm sure to say again many times, the security of the policy you purchase is a critical element of your insurance coverage.

I've talked about the issues of medical insurers and the lack of cover security with the right to update policy terms and conditions at will, including removing benefits.

I've been active in calling out the practices of insurers, removing things that people rely on. Mainly to the derision of "that doesn't happen" and "they won't do that".

Well, they have. This time, it's not a funeral benefit being relied on by a budget-conscious policyholder or pushing for skin specialists to be affiliated; it's removing a whole part of the policy we all expect to be there.

Not only that, but the delivery of the change was done three years ago, and no one noticed!

Not even the research houses picked up on this change because it is a fundamental expectation of medical insurance coverage.

What is the benefit?

Non-surgical hospitalisation. In November 2020, Southern Cross removed this as a benefit from the policy, and everyone missed it.

I will claim to have missed it as I was only just returning to work after 18 months off work recovering from my piece of Lego experience. In reality, we all missed it, and we need to stand up on that point.

But we missed it because it was a change delivered so subtly with the noise of other new benefits at a time when, as a country, we were focused on what would happen with Covid and in an area primarily assumed to be there with policies. Because it always has been.

I think what gets me the most is the egregious behaviour around delivery combined with the scope of the change.

As one client told me, this change should have come with a notice: "We are removing this benefit:.." Instead, it was delivered with the squeak of a mouse in a tornado. Here's your updated benefit schedule; we've added these benefits...

Ironically, my conversations with other advisers on this issue have almost unanimously had the response, "It's Southern Cross. Are you surprised?"

They have a point, but there's more in play here than just a provider living up to their industry reputation.

What has explicitly been removed?

Southern Cross changed the benefit sheet for Non-Surgical Treatment in November 2020 from non-surgical hospitalisation $60,000 per annum to IV Infusion (non-cancer) $750/$1,000 per annum (Wellbeing/UltraCare).

And again, some will say, "So what? This area of the policy has few claims; they changed it to suit what was needed." To a point, that statement is accurate, and what Southern Cross has said to me directly.

However, that ignores the evolution of private medical treatment and where costs for new treatments have been covered.

Those who were around with the introduction of unfunded medicines, originally with Herceptin, will know this was initially paid for using the non-surgical hospitalisation benefits on the policies that covered unfunded medicines.

Many policies with other providers today still use the non-surgical hospitalisation benefit for these claims.

It took the better part of five years before we saw product development into specific cancer benefits.

Even then, in the early days, only Sovereign MajorCare up to 2003 and Club Life medical covers provided unfunded medicines under their non-surgical hospitalisation benefits.

While we now have specific policy areas for cancer treatments where they didn't exist before, we don't know what and where the next big thing in coverage demands will come from.

  • When private chemo became an option in 2002/2003, it too was paid under non-surgical treatments.
  • Southern Cross was a problem to deal with here at the time. Even with non-surgery hospitalisation, advisers got around them by admitting clients for every treatment.
  • Private dialysis and radiotherapy in 2003/2004 also started with this benefit.
  • And there will be others I haven't seen, given that we have over 25,000 individual conditions humans can be diagnosed with.

The client that brought this to my attention holds their policy specifically for the non-surgical hospitalisation benefit.

* They have a drug-resistant long-term infection that landed them in hospital for IV treatment for several days at a time several times a year.

$750 per annum isn't going to cut it now!
* This client had surgery in Europe in early 2020, which has mitigated the need for the IV infusions since, thus why they hadn't noticed it missing until now.

The point of my noise isn't about claims today; those claims are minor in the scheme of things, as I mentioned.

The point is what this change represents for policyholders.

This change by Southern Cross effectively locks out all of their policyholders accessing the next new non-surgical treatment delivered in a hospital setting.

What that is, I have no idea; it's the point of this benefit in a medical policy.

* For context, Southern Cross has about 70% market share, and about 25% of the population has medical insurance.
* This change impacts close to one million people here in New Zealand!

This change also impacts two other distinctly client-focused areas.

  1. A client's expectation is that their medical cover will be there to respond to the future medical treatment they need, whatever that treatment is.
  2. The security of their cover, or lack of, in this case, for the policy they have today being able to respond to their future medical treatment needs.

We often comment about clients' attitudes towards financial services, especially insurance providers.

When insurers the size of Southern Cross behave as they have in this instance, you can appreciate why clients have the view of providers, insurers especially, lacking trust and integrity.

While our providers continue to do underhanded, sneaky stuff like this, we will continue to have to deal with fundamental mistrust of us by clients.

The odd bad apple is tolerable; they leave eventually, but a provider that acts this way will not change because I raised it.

It will only change with the industry applying the appropriate pressure in the appropriate places.

From advisers, other competitors, industry associations, and the FMA.

The integrity of our financial services providers is critical to the integrity of society and the communities we live and work in.

We need to be able to trust our providers to do the right thing when no one is looking; Southern Cross failed this test in November 2020.

We can beat ourselves up about missing it, but that's not where the fault lies. The responsibility lies with the provider and how they communicate with the market.

For a change of this magnitude to be missed by the whole industry for three years says more about the provider's communication than the industry's attention. Southern Cross, do better.

Tags: Jon-Paul Hale

« Review of Loadings and ExclusionsWe may be trusted advisers to our clients, but insurers don't trust us »

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