Insurance Update Issue 36

Fall 2000 CSANews Issue 36  |  Posted date : Mar 06, 2007.Back to list

We get literally thousands of requests for information at Medipac, on every aspect of Travel Insurance. After all the dust settles and all the information is digested, there is always one consistent pattern...You should buy the Medipac program.

This seems especially important in light of the increased complaint letters we have received this year, on other insurance plans. Most of these letters deal with either eligibility issues or pre-existing condition issues, and invariably there has been a declined claim involved.

When an insurance company loses money it has two choices-tighten the eligibility and underwriting criteria or raise premium rates. Raising rates is the easy answer, but this simply drives snowbirds to purchase other plans at a lower price. As a result, insurers usually fall back to tightening their eligibility requirements, using long pre-existing condition periods, changing their age bands, and generally making it more difficult to buy and to have your claim paid.

If you follow some of the plan designs from year to year, as I know many of you do, you will see that as every year goes by a plan may get harder and harder to qualify for and the chance of getting your full claim paid becomes more difficult. The real concern here is that what you bought last year is not the same for this year. Many people simply assumed the plan would be the same; the result ­ claim denied. The changing of only a few words for eligibility of pre-existing conditions can totally change the structure of a plan.

Let's look at one of the simple assumptions which may be made when underwriting a travel medical plan. Last year a company paid $1,000,000 in claims for heart attacks and they wish to not pay those claims this year. They can't simply say "We won't pay a claim if you have a heart attack" as no one would buy their plan. So what they do, instead, is say "We won't pay your claim for a heart attack if you have ever been treated for any heart conditions, or if you have high blood pressure, or if you have ever had any conditions which might cause a heart attack". They let you buy their plan but then do everything they can to not pay out that $1,000,000 again.

I personally think this is a very poor approach to the heart attack situation. We know that perfectly healthy people have heart attacks and the people who have warning signs are now taking medication and are less likely to have a heart attack. Which do you think is the better risk? We see just as many really large claims in the perfectly healthy group. The company that accepts premiums from only this group will still have large claims. Medipac's solution is pretty simple ­ allow all of them to purchase our insurance and pay the claim. This gives us more premiums to pay the claims, as well. We do, however, charge additional premium to the people on medication because they can be more difficult to treat at claim time.

One of the poorest choices an insurer makes is to let everyone buy their low priced plan and then deny many claims (as they probably must because of their low prices) by using complicated pre-existing condition wordings and other exclusions. Another example would be to only pay 75% of a claim unless you go to "their" designated doctor or hospital.

I have seen a plan with four or five different pre-existing condition clauses and even I could not understand what they all meant and which one would apply.

These plans breed ill will, misunderstandings and lawsuits. Fortunately, they don't last very long in the market place as people eventually figure out what they are really doing.

Every year, Medipac attempts to negotiate a broader plan with our insurer, which will allow more people to buy. This year we were successful in getting old cancer cases insured at our best rates. We also changed our pre-existing coverage. We insure and pay claims for Snowbirds with stable and controlled pre-existing conditions.

We're just a little different than everyone else and that's good for you ­ our treasured client.