The Association of Medical Insurers and Intermediaries (AMII) has shared the 'significant concerns' of its members over legislative changes to general insurance renewal policy at a 'productive' meeting with the Financial Conduct Authority (FCA).
AMII Chairman Stuart Scullion met with the FCA to discuss the recent policy statement on general insurance renewals (PS16/21: Increasing transparency and engagement at renewal in general insurance markets), following numerous expressions of concern among AMII members and the wider intermediary audience.
The Health Insurance Group's Brett Hill recently wrote in Professional Adviser's sister magazine COVER, for example, that the FCA's plans may not be best for PMI customers.
Scullion said: "This legislative change has prompted more response from AMII members than any other issue in the five years since I joined the executive committee."
The policy statement sets out new rules for renewal communications so that general insurers including private medical insurance contracts must now actively encourage policyholders to shop around at renewal each year.
One of the plans mooted was that insurers are now compelled to identify consumers who have renewed with them four consecutive times, and give these consumers an additional prescribed message encouraging them to shop around.
Insurers must also disclose last year's premium at each renewal or last year's premium if a consumer's circumstances have changed during the course of holding their policy, meaning that firms must give an annualised premium reflecting any mid-term adjustments.
Scullion warned that AMII members and healthcare intermediaries "are concerned that we are being bundled together with home and motor insurance under a 'general insurance' banner without due consultation and consideration of the very specific characteristics which apply in the health sector - not least pre-existing conditions and underwriting."
Scullion highlighted that of the 113 respondents to the Consultation Paper CP 15/41 - which led to Policy Statement 16/21 - there were no specialist healthcare intermediaries consulted.
Scullion said: "While we do recognise the FCA did consult with two intermediaries who offer healthcare services many of our members felt this was insufficient.
"Our meeting with the regulator was to reinforce that point but we discussed a number of aspects in some detail as it was important to hear the FCA perspective, as well as putting forward our own position on behalf of AMII members, and there was an acknowledgement broader recognition of the healthcare sector is required.
"Intermediaries generally have no concerns regarding the current and future premium disclosure requirement including the increase in cost.
"However, they have expressed significant concerns to us regarding the annual renewal suggested disclosures and in particular the mandatory Year Four statement."
Price not value
Scullion said AMII members were concerned about potential for the statement to place a substantial bias on price, not value, which could lead to "churning"of policies.
Intermediaries are also concerned there would be a failure among policyholders to recognise the significant effect of maintaining cover for pre-existing medical conditions.
Members also warned of the likelihood of higher initial pricing by providers driven by a reduced expectation on business persistency.
Scullion added: "Those who are offering genuinely independent and impartial advice have little to fear. However, AMII would be concerned about the impact on any insurer who writes direct business and any intermediary operating a Solus arrangement with a single insurer.
"It was a positive and productive meeting which will see AMII included in the consultation process on healthcare related legislation moving forward, reinforcing the significant part our body has to play on shaping our industry."
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