Best’s News & Research Service - October 22, 2015 10:33 AM (EDT)
Australian Competition Watchdog Says Health Insurance Policies Too Complex for Consumers
SYDNEY //BestWire// - Australia’s private health insurance policies are too complex, which reduces consumers’ ability to make an informed choice on best policy cover, according to the Australian Competition and Consumer Commission.
In its annual report on the health insurance industry, the ACCC said complicated policies are among a number of “market failures” in private health insurance that make it difficult for consumers in determining the effectiveness of various policies given their uncertain future health needs.
“A range of factors contribute to this complexity, including regulatory settings, the sheer number of policies available, the range of benefits and exclusions, preferred provider arrangements, policy variations and differing terminology between funds which makes comparison difficult,” the ACCC said.
The competition watchdog highlighted that regulatory incentives are driving consumers to lower-priced policies than they would prefer. While price is a major consideration for consumer decision making, the ACCC said it is concerned that some consumers are not fully considering the trade-offs between the costs and benefits of the various policies on offer.
“This is leading to some consumers facing detriment when they come to subsequently claim under the policy and find their procedure is not covered. This is of concern given recent reports that suggest that insurers are encouraging consumers more broadly to downgrade their cover to secure cheaper premiums. As a result, consumers are finding themselves more often without the cover they expected,” the ACCC said.
As a result, the ACCC said complaints to regulatory and complaint bodies about unexpected out-of-pocket expenses and bill shock are rising, due to “a significant disconnect” between consumers’ expectations of the services and rebates they are entitled to receive under their policy, and the actual benefits their policy provides.
To protect consumers, the ACCC made a number of recommendations including a review of Standard Information Statement requirements to ensure they are an effective information and comparison tool, standardizing policy terminology and introducing an easy to use interactive tool to help calculate out-of-pocket expenses before policies are sold.
Still, the regulator said it will conduct further review of the current market practices.
“In line with the ACCC’s current focus on the health and medical sector, the ACCC will be closely reviewing some practices in the health insurance industry to address concerns regarding incomplete policy information that are not only confusing but also misleading,” ACCC Deputy Chairwoman Delia Rickard said in a statement.
(By Ernesto Calucag, Hong Kong news editor: Ernesto.Calucag@ambest.com)