Insurance advisers face non-Pharmac poser

Totally agree with Mark. Access to funding to pay for treatment not publicly funded is the reason clients pay for medical insurance. If you are not discussing the issue with your clients and giving them sufficient information to make an informed decision on the issue you are likely to find Section 9 of the Fair Trading Act becomes your worst nightmare - just ask Mr Hartles. I disagree with Russell's attempts to trivialise the problem because while the need for non-funded drugs may only arise in a relatively few cases (how do we know this? Do insurers keep track? I doubt it)the costs involved are enormous - exactly why insurance is needed. In addition, my understanding is that there are many drugs not funded and in particular many new ones not funded because it takes Pharmac many years to research and approve new drugs. While there are insurers out there willing to cover non-funded drugs, in my view it is a breach of any number of laws not to raise it with your client and give them the options. It's all about looking after the client, not justifying what might be convenient to the adviser.

So on this basis, which required guaranteed wordings, you've got to offer Partners Life and OnePath. Otherwise you either don't get the cover or aren't actually guaranteed it will be around at claim time.

Just make sure your not on the front page of the paper when you find that your client gets declined on a claim with their new policy because of non disclosure!And while your at it just twist your whole base for the sake of it, I'm sure Mr Jones will have a good enough reason to justify it. The new company I'm sure has lovely take over terms proposals!! I wonder who the company is?? And has Mr Jones had a holiday recently to the States:)

Forget non-pharmac drugs. In politics, what is promised at the time of election does not always come to pass when in power, and don’t we all get excited about that.
Is this not the same with policy wordings? Maybe not. When recommending cover I always look to who guarantees their wordings, and from what I have seen, only two medical insurers guarantee wordings. Therefore, forget non-pharmac, as pretty much as soon as there is a run on claims, most insurers simply remove benefits.
Do you ask your client whether they want a guarantee? Now from an advice point of view, if you are not recommending one of the companies that do guarantee medical wordings, do you spell this out in your SOA , and why?

Yes you can minimise costs by allowing an insurer to remove or change benefits retrospectively, but do you give the client a choice?

There are a lot of advisers who hang their hat on one part of an overall plan and use that to "justify" why they recommend it. Some actually believe in what they are doing while I'm sure others do it for the money and only the money... It will be interesting to read the comments from all of the self proclaimed good advisers. In the meantime I will have another read of the policy wording to see if I can find a "good reason" why my clients need that policy that pays the most commission.

At the end of the day it simply comes down to giving quality advice to the customer you have in front of you. For some customers - non pharmac is of great benefit. For some customers - it may be a little less salient.

Either way, if our advisers fulfill their role of providing quality advice, you cannot tell them that they must recommend certain policy types.

Agree with Mark. This discussion is just all about making our clients "aware" that some health insurers offer non pharmac benefits AND guaranteed wordings whilst other health insurers don't. I would have thought that most advisers would view these kind of policies as a "golden opportunity" to have a conversation with their clients about the benefits of health insurance?

Becareful if you are looking to change the earlier Sovereign medical policies as they do have non Pharmac cover.

I have the old MajorCare. It doesn't explicitly cover non pharmac stuff, but doesn't exclude it either. That's why I still have it.

I always wonder if the Marks of this world know about that.

Well said guys, the old Met-life payback medical covered non-pharmac...but hey lets move it anyway!!

I have been providing Medical Insurance for my clients for nearly 22 years in NZ. During that time I have had countless claims via a variety of different Insurers, and I have had different claims service and different claims paying attitude from those different Insurers. However never once in that time have I had a claim for Non Pharmac drugs. THAT DOES NOT MEAN I NEVER WILL, however to somehow make it the only criteria for where a Broker places a medical policy I find worrying. I also find it disturbing that this Industry seems incapable of rational debate unless we have some outlandish scaremongering thrown in for good measure. We now have the twin bogeymen of the FMA and Grey suited Lawyers to scare us all witless.

Unless you have a high percentage of clients in the top 10% of earners it will be academic. Medical Insurance used to be taken by over 40% of the people. It is heading to 25%. Another 2 years of the rate increases we have seen and it will hit 25%. The insurers have to keep raising the premiums simply to meet the rising costs. I predict 1 of the larger ones will exit the market in the next few years !!!!!

I think as a client I'd rather have the policy that covers all available treatments...especially if the premiums are the same - why not? Surely we are talking about future proofing ones' access to private medical care and who knows what sort of treatments will be available in 20 years time?

What a lot of rubbish!! I'm sick of all this over the top scare tactics! Try suing me then! If it wasn't for me they would not have had any cover!! If the drugs are proven 99% of the time they are Pharmac approved! The Marks of the world wouldn't know how Pharmac operate and the Marks of the world probably don't even have medical cover themselfs!!

@ Kevin
As a client you are typical with that want. Cover everything. But the premiums won't remain "the same", if the wording is 'guaranteed' and extremely expensive drugs are covered.

I know that one major insurer who has soap-boxed the drugs thing to death is losing millions of dollars a year paying those claims. It blatantly cross-funds its health product by requiring health be sold attached to life or other cover.

The more flexible and slightly less comprehensive cover may sound like a disappointment waiting to happen, but it is those measures which will make the plan sustainable.

So a good adviser should explain that, if you really want to still have your cover for that treatment 20 years from now, then you will need it to be affordable for at least 19 more years.

Perhaps, after due consideration, you realize that you want to cover most things with a reasonable plan at a reasonable price.

Great to join this discussion. What if the non-Pharmac insurers got claims soar, the premium your clients not affordable and you recommended the insurer, wouldn't you be in trouble as well?

As an individual with a family who has a policy that does not have cover for non pharmac medications (was not aware of this until reading the recent postings) I have never, ever had any issue whatsoever with my provider when I have lodged the 5 claims I have had to for my myself, my wife and our three kids. I would quite frankly, be more concerned with how robust and financially secure an organisation was and their ability to pay claims (and I have had 5 fantastic experiences) before offering to pay "fringe claims" that are not covered by Pharmac.

After watching and participating in this industry for some time, I'm still surprised by the single feature view to solve a very wide problem. In this day and age the client is king, if we're not explaining to our client all of the factors which affect their decision and asking them which are the most important to them, we're not doing our job. But consider the number of people on old 80% plans who have to use the public system because they can't afford the 20% excess. They're paying premium for cover they can't afford to use, surely this is a bigger issue than weather treatment is safe to use but not funded or safe to use and funded. I concur with Shaun's point, 99% right is pretty close when 80% is your typical rule of thumb. If funding is a concern use Partners Life and OnePath, if not and premium stability is an issue, try the others. Premiums will increase every year, because Doctors buy shiny new toys to do a better job of what they do, you can't predict where this will impact as it will impact all eventually.

I find this above argument of advisers very alarming and disturbing as I find that some advisers have forgotten their training of using the excess a tool to help the client maintain an affordable premium structure for their medical insurances.
I think the Insurance companies needs to once again train their advisers on their product knowledge.
I am for surely of an opinion that Non-Pharmac Drugs and Guaranteed Policy wordings are a very important to secure the client's interest.3

I agree with Giles and Shaun. Yes we need to do what is best for our clients and in the product we offer them is suitable for their needs (fit for purpose) then that is what we should do. I don't buy in to all of the scaremongering and threats of being sued. Should you be worrying that you maybe sued because you sold a trauma policy that covered 39 conditions and now there is one that covers 41. I think if we operate this way, no insurance will be sold.

I'll say it again. Forget pharmac and look to guaranteed wordings. Whether a policy has non-pharmac or not, premiums will increase. The only way to counter that, is to take benefits away.So again I say to you, do you ask the client whether they want gauranteed wordings.

PS:
"PHARMAC's legal purpose is:


"to secure for people in need of pharmaceuticals, the best health outcomes that are reasonably achievable from pharmaceutical treatment and from within the amount of funding provided."

New Zealand Public Health and Disability Act 2000 "

So why do we sell private insurance to our clients? So they have choice, a choice to choose where and when they have treatment. There is a limitation on what can be funded publicly, and remind we again, isn't that what private insurance is for.

@Dirty Harry

'I know that one major insurer who has soap-boxed the drugs thing to death is losing millions of dollars a year paying those claims. It blatantly cross-funds its health product by requiring health be sold attached to life or other cover.' Pretty bold statements here - would you like to tell us all who this insurer is?

yes, and if they are losing millions of dollars each year with this benefit - then surely this benefit is worthwhile, as other insurers are not covering these costs - you basically prove the point!

@ Kevin:

DirtyHarry is clearly making reference to OnePath, who require medical product to be sold in conjunction with some level of risk product.

I agree with Dirty Harry that having a slightly less comprehensive plan will be what makes it sustainable (considering current medical inflation).

But OnePath customers now have the option to opt for a base plan that does not cover non pharmac and will be a sustainable long term option.

@ 6ftndr : yeah exactly, so are insurers getting a lot of non-pharmac claims or aren't they? If they are then that discounts what most advisers are saying that it isn't a benefit worth having. If they aren't getting a lot of claims then it's clearly an affordable benefit for the insurer to offer.

Hmmmm. 6ftndr seems to think that a company providing a benefit other Insurers do not and subsequently (supposedly) losing millions of dollars is sustainable; where is the money going to come from other than from policyholders via increased premiums? Whether OnePath is "losing millions" on this product I suggest is a question best directed at them rather than hypothesised upon here, unless of course Dirty Harry can tell us how he knows this "fact"? OnePath do charge 10-15% more for the deluxe version that includes guaranteed wordings and non Pharmac drugs, so we have a choice to give our clients. A question though for Mark Jones before he embarks on his crusade is, do all of his clients have full disability cover? Which type of protection is most important to a clients limited premium dollar? Surely a question as part of a full review rather than one size fits all??

I was told by an insider that the number is 10 mil. It is hard enough to make health insurance work - just look at the problems southern cross is having, and if you go and pay a truckload of claims that most other players would not have paid, you are putting yourself on the back foot.

OnePath's 'more sustainable' and lower cost policy does away with bariatric surgery, guaranteed wordings and non pharmac drugs. Sovereign, Tower, SX and Accuro never had those things. Only recently have some things crept in.

OnePath's 'deluxe' policy got a lot dearer, and is being cross funded. This doesn't mean its affordable at all, it means the policy is too good, too generous and will not be a viable long-term proposition. If Kevin wants his (let's say heart/knee/hip) procedure covered in 20 years time, he might find he cant keep up that policy that long, even with a $4,000 excess.

The main purpose of health insurance is to avoid waiting lists for elective surgery, specialist consults, and major non-surgical procedures. In the ratings game all this other crap was added, and BDM's went around one-upping each other. A few years on and things are changing back again.

For many cancers there are several treatments which may or may not be funded. Just because the insurer covers the non-funded stuff doesn't mean it's right that they should, or even necessary.

I had an interesting conversation with someone at the recent product accreditation roadshow. I got the feeling that more had been said than ought, and will for that reason not go into it any further.

I heard enough to reconsider much of what I had previously thought about health insurance advice.

Can't believe we are even debating this folks! Non Pharmac drug cover IS a health benefit worth having. Would be like giving a client income protection and only having the policy payable for 12 months (versus paying to age 65) Yes, the likelihood of the client needing a non Pharmac drug is remote (and so is the client needing that monthly income benefit from the insurer to age 65) but what if they do….??? Insurance is supposed to be all about protecting our clients against a "worst case" scenario. Why else take cover to begin with?

I ask those advisers who question the worth of having non pharmac cover to put themselves in the shoes of an adviser who has to say to their client that the health policy they sold them 2 years ago won’t now cover the $100,000 worth of experimental drugs (year one) that their partner or child needs. Now swing that round and imagine been the adviser who tells that same client “guess what, your health insurer is going to be paying for the full treatment programme recommended by your specialist” Not sure about you lot but the second scenario is why I work in this industry.

As far as the long term sustainability of non pharmac cover is concerned I agree with Kevin’s comments.

- See Giles Thorman's comments

I never said anything like what you wrote, you obviously misinterpreted me - I meant to portray "if a company is losing millions on a benefit that others do not offer, then this means that lots of their customers are actually using it and can see the benefit of it - they just need to price it right so they don't lose millions - actuary's are supposed to work out these problems are they not?

imho though i don't see what all the fuss is about, we have hardly ever had every insurance company offer exactly the same benefits for each product sold - look at ipp and what a bloody minefield that is, this is just another bump in the road we have to navigate over with our clients

By having this debate every adviser is on notice to make an honest, objective and rational investigation into the extent of the problem so that they are able to honour their obligations to their clients (and I'd suggest you keep a detailed record of your findings for that defence you might have to put up one day)and provide unambiguous, accurate and objective advice. My understanding is that there are many drugs that are not funded and even when they are they are not always funded for the purpose required by the client. Even Herceptin is not universally funded for every client for whom it might be recommended. Good professionals know what they are talking about and don't make convenient assumptions.

There has been a lot of comment but here is a reality. Accuro announce today enhancements. In the last 3 years Accuro premiums have increased by over 100%. How much longer does anyone really think this will keep going?

Accuro 100%. Partners 10% and a range of other changes to protect them from cash flow problems. Onepath. Non pharmac now a pay for benefit. Perhaps policy wordings that look to good to be true actually are just that, to good to be true. Short term great. Long term ???????

Surely the problem with non-pharmac is not whether a company can afford it now - but whether it can be afforded in the future. By having such a wide definition - bearing in mind non-pharmac sits outside govt affordability criteria - then insurance companies leave themselves open to future claims - meaning it is not affordable for clients going forward - surely that is the reason Onepath changed to optional and Partners changed their deal.

There have been a number of companies over the years who have changed their medical product and simply increased the premium to force clients out.

Surely we don't want to encourage this? Providers can add on everything they want - and then just make it too expensive

So we have the perfect excuse to churn medical insurance! And every time an insurer introduces something new, it can be churned again.

Does the fact that a perfectly good policy has been overtaken by something new really justify a churn?

Here is a good definition of churn:

"Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle. The churn rate can be minimized by creating barriers which discourage customers to change suppliers (contractual binding periods, use of proprietary technology, unique business models, etc.), or through retention activities such as loyalty programs.

So lets break it down:
1. Dissatisfaction
2. Better price
3. Better product
4. Customer loyalty

I know clients who are so loyal to their adviser they would not contemplate moving unless their adviser told them to do so. So here is the question. If you have built a strong relationship with your clients, and they have trust and faith, why would they contemplate being "Churned" by another adviser?
So lets move on to regulators. Depending on the personal circumstances of your client, Accruro may be the best fit, OnePath maybe the best fit, or even Tower. But what happens the day that one of those companies turns around and retrospectively changes the product:
1. Is it still fit for purpose?
2. Does it still meet the needs of the client?
3. Have you done a review of the cover and told the client that the cover has changed, and then do you give the chance to select another product (and hope they don’t end up with terms)?

As a client I would expect an Insurance Advisor to notify me of the policy option of funding for non Pharmac listed drugs. Indeed they would be negligent if they did not advise me.

I take exception to Russell Hutchinson's comment "If they [the drugs] are really useful, they tend to get funded". Pharmac's primary motivation around recommending drugs for funding is economic.

Four years ago I was diagnosed with metastatic kidney cancer. I was given no viable treatment options and told I would have 1-2 years to live. The only viable treatment option was a non Pharmac funded drug called Sutent. The cost of this drug was $ 10,500 per 6 week cycle. I had held a policy with Southern Cross for many years. This insurance company was a default work place option as part of a salary package. I simply could not believe the paragraph in the policy document that specified Southern Cross did not fund non Pharmac listed drugs. I was in big trouble health wise ...

However I took a punt and between fundraising and a free cycle offered every 2nd and 6th week by Pfizer I could take the drug initially. Prior to treatment I was receiving blood transfusions, on average, every nine days because of internal bleeding. Within a week of taking Sutent this bleeding stopped.

However, always lurking, was the inevitable thought of what would I do when I could no longer afford to fund the treatment, so I put my home on the market. It was at the trough of the real estate downturn and my house didn't sell. I planned to put it back on the market in October 2010 but damage caused in the September earthquake was extensive and the house was no longer in sellable condition. You can imagine how I felt when Pharmac finally told me they would fund Sutent in November of that year. Big "Yay"!

Why should any chronically ill person go through that stress and indignity to get the treatment they need. There were days when I was just desperate wanting to be around for my two daughters on not die on them. Why should some people "play God" making decisions over who shall live and who shall die when there are effective treatment options at hand. Yes, the drug is expensive, but so is being kept in hospital for long periods of time.

However I digress away from the responsibility of the Insurance Agent to notify clients of the option to purchase a policy that includes funding for non Pharmac listed drugs. I always advise people to seek advice from an Insurance Agent so they do not end up in the same situation as myself. I have spoken at insurance seminars given by Stephanie Wiki on the value of insurance cover for non Pharmac listed drugs and I am a strong supporter of the value of your profession. Do not disappoint me by suggesting that in any way clients should not be informed of this life changing option.

You can see more about my story at:
>>http://tvnz.co.nz/breakfast-news/breakfast-friday-february-26-3382752/video?vid=3382823
>>

@Jane
Thanks for sharing your story Jane. Having had conversations with several clients who had cancer and were terrified of leaving their children, and currently working with a recent widower with 2 school age children and no insurance at all, I can appreciate your story.

Let’s deal with Russell’s comments first. Pharmac is legislated to get the best value they can for the funding. This means making tough calls about greater good, largest numbers, cost of the treatment etc etc. It inevitably means that some miss out. Those treatments that are most effective/proven/useful/needed and don’t cost too much tend to be the ones that get the tick.

I note that you do not appear to have any anger for Pfizer over the exorbitant cost of their Sutent? Pharmac does, and it’s causing tension in political circles as the US drug lobby resists Pharmac driving down their prices. Pharmac does a pretty good job balancing everything out, and gets the general populace bloody good value.

The great problem with Southern Cross is the lack of scope and the limitations of their cover. Strategy rate Southern Cross's most common workplace policies, such as “KiwiCare” a D on a scale of A to D. In the videos Pippa, as part of her frowny-faced beat-up, twice described your Southern Cross policy as “top of the range” (ironic to call it that, when her story was about how it didn’t pay). Their top policy, Wellbeing 2 only gets a B. Hardly tops.

But they are cheap. Very cheap. And don’t try to argue that that wasn’t part of your decision making prior to 2008. I would be interested to know what other advice you sought, and what other insurance you had prior!

Add to that workplace policies often come with little or no actual advice (tearoom lectures don’t count), let alone a detailed, personalized review. I am not certain from the story above, or from your Breakfast video (feel free to add details to correct me here) that you actually worked with an insurance adviser to discuss insurance prior to your cancer in 2008, so your point about what you “expect” an adviser to “notify” you on is moot. You said you have to live without your income, for example. Drugs funded or not, income insurance would have helped wouldn’t it?

I submit that an adviser who has a pet subject such as non-parmac funded drugs – such as Jones – the subject of the article, and Wiki in her interview on Breakfast, and builds their recommendations on a narrow set of parameters such as that without giving proper consideration to the client’s preferences, situation and requirements, is the negligent one.

The difference in cost between, say OnePath (then called ING Life) or Partners (who didn’t exist then), and the plan you had, would be significant. Even when I highlight the policy research, the ratings, the differences in cover to clients it is the price and the fact that their employer or group is subsidising their policy that often keeps them there.

So in cases like that, rather than spending extra to go to another insurer, and creating the non-disclosure risk or picking up an exclusion or three, I often suggest Trauma cover to help ‘fill in the gaps’ as an alternative option.

For less than the extra cost of a different health policy we can usually put in place $100,000 or $200,000 of trauma. Cash from a Trauma payout (pretty sure metastatic kidney cancer would be covered) would have paid for your partner’s time off work, a decent break away (why recover at home when you could do so on a beach at Fiji?) and helped with the Sutent.

To all the other advisers on here making this a one-issue debate about policy wordings; it would be a breach of several code standards to build advice in that way. In fact, most of you probably don’t, but it pays to be mindful clients are reading this stuff.

Jane, we advisers often face an uphill battle just getting in front of prospective clients, getting the info to build our recommendations, presenting those recommendations and getting agreement from them to actually put some of it in place. To have someone who doesn’t appear to have even gone through the advice process, who had no income or trauma insurance and only the cheapest health insurance option at the time, become an expert after the fact on what the adviser they didn’t work with should have told them, to me sounds more than a little trite.

At the least it’s unwelcome and unhelpful.

Very interesting comments. I want to agree with some of Dirty Harry's comments. For an adviser to take a "keyhole view" of a product, eg to recommend a medical product only on the basis of non-Pharmac cover is unprofessional at best and dangerous at worst. Professional advisers take an holistic view when considering a client's needs and the applicability of products to meet those needs.

Jane's story, whilst touching, highlights the danger in accepting low level products offered by an employer as part of a remuneration package, without considering the inevitably better products available through a professional adviser.

@Observer: I suggest that the "churn" referred to in the majority of these posts is churn by the adviser who wrote the replaced business, ie write with insurer 1 this year and "churn" to insurer 2 in year 3 for another bucketful of new business commission. It is this "churn" that professional advisers find abhorrent.

@Dirty Harry
I think you missed the point on several accounts:
>>Would you be happy to be the one that Pharmac leaves out? To be unfortunate enough to have a rarer cancer. I already mention it has been more cost effective for the government to have me well enough to be kept out of hospital.
>>I have not mentioned my feelings about the drug company Pfizer - please don't make assumptions on my part
>>You will see from the Breakfast interview I correct Pippa on the "top of the range insurance option"
>>I am saying that had I consulted an insurance adviser I may have made different decisions, informed decisions based on their advice rather than accept the default offered as part of my employment package. In addition to which I would now expect that insurance adviser to mention the non Pharmac listed policy options.
>>Income insurance would not have helped me fund my drug treatment.
>>If I had of consulted an adviser I may have taken up the options you suggested. How reactionary! I actually supported your argument ...
>>I note you hide behind 'Dirty Harry', why don't you say who you are?

I agree with Graeme about taking a holistic view, but that also includes fairly considering all providers and not creating convenient, spurious, arguments because you don't want to sell OnePath or Partners.
What Jane's story proves is that the Pharmac issue is a real one and a significant one which cannot be ignored when discussing risks and insurance with clients. Not raising the issue and discussing with it with clients (giving them sufficient information to make an informed decision)will almost certainly be misleading in terms of section 9 of the Fair Trading Act, actually read Gilmour v Decision Makers and Hartles if you don't believe me and HOLD ON TO YOUR WALLETS!

A couple of e mails and calls to the relevant organisations reveals that...
Medsafe has approved 5854 drugs and Pharmac has fully or partially funded 2163.

Gentlemen

We need to remember that this is a public website and respond accordingly and discuss the issues and not the attack the individuals.
Knowing Jane Egerton I invited her to respond as I felt it added a personal perspective not just theory.
I know Jane has freely given her time to speak at seminars to help ‘educate’ staff but most people will not change from a ‘free’ product to one they have to pay for.
As Adviser of 25 years I have been through the changes and development of Private Medical Insurance. I have had several clients claims declined as the policy wording had changed, not a happy space to occupy.
My membership of the IFA, states that I must put the client first, and the FMA users something similar with the Authorised Advisers requirements.
I always touch on medical covers on client review, with my average client aged in their 50’s Medical premiums are heading $300 - $400 per month and starting to impact on Retirement savings I use, Strategy to back up my recommendations.
Yes Partners Life seems to tick most boxes but more than just product wording the $10,000 maximum excess allow me to feel confident that my clients can still afford cover in their 70’s when they need it most.
I know Jane has freely given her time to speak at seminars with staff but most people will not change from a ‘free’ product to one they have to pay for.
Southern Cross and Unimed have a huge % of the group market and thus a high proportion of the NZ population.
I understand Partners Life is aiming for the Group market early next year. The challenge for advisers is to market to this huge segment of corporate buyers and convince them of the improvements they can make to their staff welfare and that after all is what we as advisers are paid for.