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ombudsman news

issue 51

January/February 2006

the Financial Ombudsman Service and private medical insurance firms

From time to time, in addition to our series of workingtogether conferences for firms and financial advisers, we organise smaller, informal events, focused on a specific topic. These give us the opportunity to meet a cross-section of those working in a particular field, listen to their views, explain our approach, and increase mutual understanding.

One of these events took place on the afternoon of 1 February 2006, when we hosted an informal seminar in our offices in London’s Docklands. An invited audience from around 30 insurance companies and intermediary firms, together with trade body representatives from the Association of Medical Insurance Intermediaries and the Association of British Insurers, met some of our insurance ombudsmen. On the agenda were issues connected with private medical insurance.

The number of private medical insurance complaints we receive is relatively small. During 2004/05 we dealt with just 337 cases relating to private medical insurance, out of a total of 110,963 complaints. However, we do appear to be seeing a slow but steady increase in this important area of our work.

All the feedback we have received so far about the seminar has been very positive. We are likely to repeat events of this type in the future and welcome the opportunity they give us for detailed discussion with experts in their own particular fields.

The following questions and answers reflect some of the private medical insurance issues discussed at the seminar on 1 February.

what are the main causes of private medical insurance complaints referred to the Financial Ombudsman Service-

Over three-quarters of the cases we receive relate to policy terms and conditions. Disputes arise over matters such as:

  • the exclusion of claims because the insurer has deemed a condition to be "chronic" and therefore no longer covered
  • limits on benefits because, for example, the insured person was not treated at a designated hospital
  • the application of exclusions for experimental or unproven treatment
  • the exclusion of cosmetic and other treatment.

Other significant areas of complaint include maladministration (including delays in authorising treatment or meeting claims) and non-disclosure by the policyholder.

how does the Financial Ombudsman Service decide whether an insurer should pay for medical treatment-

We never make our own medical judgement on whether a particular form of treatment – or a particular hospital or doctor – is right for a policyholder. Nor, generally, does the insurer. It’s up to the policyholder’s doctor to decide what is right for their patient.

Our role is to assess the evidence and reach a view on whether the insurer has acted fairly and reasonably when deciding whether to meet a claim, taking into account the terms of the contract, the law, good industry practice and the regulator’s rules, as applicable at the time of the event complained about.

how does the ombudsman assess the medical evidence in disputes over medical claims-

There can be no hard and fast rules about the weight we attach to conflicting pieces of medical evidence. Much will depend on the details of the individual case. However, some of the factors we generally take into account include:

  • the doctor’s professional qualifications and specialisation
  • the degree of knowledge that the doctor providing the evidence has of the policyholder’s circumstances
  • the nature of the doctor’s examination
  • how close in time the report was to the events at issue
  • the independence of the person reporting or commenting on the issues
  • any special circumstances surrounding the report.

Our approach is set out in more detail in issue 24 of ombudsman news.

what is the ombudsman’s position regarding exclusions for unproven and experimental treatment-

Most medical insurance policies provide cover for the cost of treatment but do not accept responsibility for providing medical treatment. However, many insurers seek to exclude treatment which is unproven or experimental. In very general terms, firms are entitled to exclude certain treatments from the cover they provide (as long as this is made clear to policyholders), and to limit cover to the cost of treatment that has been recommended by consultants or specialist physicians.

So what happens when, for a condition that is covered, a policyholder has been advised by their treating consultant to a have a newer treatment instead of an established procedure- Our view is that it would be a harsh and unfair outcome for the firm to reject the claim in its entirety and require the policyholder to have treatment that differs from that recommended by the consultant. It would also be unfair for the insurer to have to pay significantly more for experimental treatment, when it believes a conventional procedure would be adequate.

Our general approach is that it would be fair and reasonable for the insurer to indemnify the policyholder for costs, up to the sum the firm would have been liable for if the conventional treatment had been carried out.

Walter Merricks, chief ombudsman

ombudsman news issue 51 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.