Canada – moving forward?

ITIJ 198, July 2017
Regulators in Canada have told local travel insurers to lighten consumers’ burden. What is the situation, and where could it be going? Milan Korcok reports
 
After a year-long national colloquy with key stakeholders in the travel insurance industry, Canadian provincial, territorial and federal regulators have issued recommendations that would require insurance providers not only to de-mystify the purchase of their products, but assume more responsibility for helping consumers select the most suitable coverage for their specific needs and, if necessary, develop additional products for those with more distinct needs.
According to a final Position Paper released by a Travel Insurance Working Group of the Council of Canadian Insurance Regulators (CCIR) issued in May 2017, ‘While the [travel insurance] industry seems to suggest that better consumer education is the answer [to assist consumers to determine product suitability], the Working Group believes this approach does not address the problem and instead places a substantive burden on the shoulders of the consumer to be the expert’.
The Position Paper just released is a follow-up to a preliminary paper issued in 2016 in which the CCIR Working Group issued a schedule of concerns about the need for making the purchase of travel health insurance (THI) more user-friendly, more transparent, easier to navigate, and to ‘improve consumers’ confidence’ in the THI marketplace. In response to that Position Paper, the CCIR sought and received comments and submissions from public sources as well as from stakeholders in travel insurance, including the Canadian Life and Health Insurance Association and the Travel Health Insurance Association (THIA).
In its report, the CCIR concludes: “Overall, Canada does have a strong and reliable travel insurance market … [however] there are opportunities for improvements to be made within the travel insurance marketplace, especially in the fair treatment of consumers.” That’s a position THIA president Will McAleer agrees with: “We concur with CCIR that the travel insurance marketplace be made more transparent and more user-friendly, and we are encouraged that many of the enhancements recommended by the CCIR are ones which we have already been promulgating. We look forward to working with regulators and our customers to make the acquisition of travel insurance simpler and as effective as we can make it.”
Release of the Position Paper comes just as THIA was releasing its own Bill of Rights for travel insurance consumers, an initiative it has been working on prior to the CCIR issuing its statement of concerns (see sidebar). 
 
Product complexity
In targeting the ‘complexity’ of THI products, the CCIR Working Group focuses on the multiplicity of product varietals – single-trip, multi-trip, medical or non-medical coverages. It states: “The amalgamation of coverages and how policy documents are presented [bundled, multiple regimes and options] are factors that influence public perception regarding the complexity of THI products.”
CCIR’s recommendation: Product features should be presented more clearly and laid out in a manner that is easy to understand. THI products and related materials should be simpler and more targeted, preferably with a limited number of plans, regimes and options.
 
Dealing with jargon
The age-old problem of terminology and definitions (the ‘pre-existing conditions’ syndrome) has long bedeviled travel insurers and (perhaps more so) their customers. The CCIR has re-asserted its plea for a standardisation of terms and expressions that underlie products, and also suggests the implementation of 1-800 telephone call-in lines to help customers deal with arcane policy language. Such customer services are already prescribed by law in the province of Quebec.
“This lack of consistency in the terminology and the absence of standard definitions add to the confusion faced by consumers navigating the products and options available to them,” asserts the CCIR, “and makes it difficult to adequately compare and understand product features.”
Standardisation of definitions was one of the founding priorities underlying the formation of THIA in 1998, and although attempts at defining terms such as ‘pre-existing condition’, ‘emergency’, and ‘treatment’ have been developed and proposed by various THIA subcommittees, none have achieved ‘standard’ status or been widely adopted by individual member companies.
CCIR’s recommendation: Produce a list of all relevant terms to be defined … and establish a target deadline by which the industry can agree to use the standardised definitions for the terms identified.
 
Underwriting
In its assessment of documentation used in the underwriting of THI customers, the CCIR Working Group found that 95 per cent of applicants sold policies in 2014 were automatically accepted, in most cases based only on very general questions that applicants had to navigate by themselves, and with no additional or follow-up underwriting. In effect, it was up to them to underwrite themselves. “As such,” says the Working Group, “the burden of determining the limits of coverage that apply to the insured and the product’s suitability lies with the applicant, who may not be in a position to properly understand the important conditions that would affect their eligibility or suitability, contributing to existing expectation and knowledge gaps. Together, these factors and the expectations that are created as a result, contribute to the public perception that THI applications are reviewed post-claim.” 
the [Canadian] TI marketplace [should] be made more transparent and more user-friendly
The Working Group noted that while industry responses suggest that better consumer education is the answer to improving underwriting practices and assisting consumers to determine product suitability, ‘this approach does not address the problem and instead places a substantive burden on the shoulders of the consumer to be the expert’: “The CCIR  believes insurers should carry out a diligent review of existing products to ensure … [they] meet the needs of the consumers to which they are most suitable and realign or develop additional products for those consumers that have more distinct needs.”
CCIR’s recommendation: Insurers should improve application and screening processes to properly identify applicants who would benefit from either a different THI product or undergo additional underwriting prior to making a purchase. Such an approach is also consistent with the outcomes promoted by ICP 191. Also, insurers should prominently inform consumers before purchase that they will use the information from the application to assess eligibility for any claim made.
 
Marketing and sales
As travel insurers have expanded their product lines to encompass older, sicker, and more questionably literate applicants, disclosure forms and documents have grown longer and more complex. This has been exacerbated by a multiplicity and bundling of plan options – single trip, multi-trip, or both – and in trying to cover all bases with off-the-shelf disclosure, promotional, and policy documentation, insurers have sacrificed clarity, structure, and basic information about what is covered, excluded, or limited in any given product being considered by an individual customer.
In explaining how they might deal with this mounting volume of documentation, the CCIR Working Group emphasises that ‘stakeholders did not provide any tangible suggestions on how to simplify disclosure documents and … reduce their length and complexity’.
CCIR’s recommendation: In addition to using plain language and simplifying and shortening disclosure documents, insurers should draw attention to the important elements needed to make a purchase of a specific policy, and disclosure documents should be specific to one plan, regime or option.
 
Pre-sale disclosure
Given the growing emphasis on making THI sales faster and easier and processing them through more varied non-personal platforms such as smartphones and social media, it has become commonplace for customers to see their policies, benefits, exclusions, limitations and even their own eligibility restrictions only after they have made their purchase. They must then rely on their Confirmation of Coverage documents to see what they have actually bought, by which time the tendency may be to just file their documents in a drawer, for attention at a later date.
THI products and related materials should be simpler and more targeted, preferably with a limited number of plans, regimes and options
To combat this information lag, the CCIR Working Group would have insurers ensure appropriate disclosure before the product is sold. It emphasises that ‘consumers are entitled to have access to sufficient information to make an informed decision’, and that ‘information must be available upfront’.
CCIR’s recommendation: “It is the CCIR’s expectation that insurers should publish disclosure documents and policy specimens through the various sales channels it uses (internet, phone, in-person, group policies) for pre-purchase consultation and without the obligation to close a transaction. In addition, insurers should promote the availability of such documents in any of their promotional or advertising material.”
 
Distribution channels
The proliferation of THI distribution channels through insurance agents, banks and credit unions, travel agencies, employee benefit plans, fraternal associations, and so on, has raised concerns among regulators about the ability of insurers to control and be accountable for the way – and the conditions under which – their products are sold.
“The CCIR has long taken the view that insurers are ultimately responsible for ensuring that anyone selling their products [should] have sufficient knowledge and expertise about the product to be able to explain its features and exclusions, restrictions and limitations,” said the Working Group, “and/or identify where consumers should seek more expert information.”
CCIR’s recommendation: Insurers should be able to demonstrate that they have in place effective controls and oversight over all their distribution channels regardless of the type of sales channel … [including] those who solicit customers with respect to insurance products, or negotiate or transact an insurer’s products … and ensure they are adequately trained to sell those products.  Such controls should include the collection and monitoring of data per sales channel.
 
Third-party roles and accountability
The Working Group notes that though some in the THI industry had differing views about the amount of oversight necessary over third-party administrators (claims management, programme development, distribution) they must ensure that third parties are in compliance with legislative requirements and codes of conduct, and that services are being conducted properly ‘as if the insurers were themselves providing such services for their products’.
CCIR’s recommendations: 
Insurers need to ensure that in all policies, documents and other materials used in conjunction with their products, their identity is clearly disclosed and information is readily made available regarding how to contact the insurer regarding a complaint, dispute or concern. Providing consumers with clear information, including who the insurer is, before, during and after the point of sale is a key outcome in ensuring the fair treatment of consumers.
Claims management processes should not unnecessarily deny claims for unrelated health situations or for errors or omissions in applications while acting in good faith. This is an issue that strikes at the heart of claims denied for non-disclosure, where the cause of the denied claim is unrelated to a condition, symptom or treatment that the applicant has failed to disclose on his or her application for coverage. This is an issue that has provided much ammunition for media claiming unfair treatment by insurers of applicants who just made ‘a little mistake’ on their medical underwriting questionnaire.
Claims managers should  explain claims dispute processes and how to escalate claims to appropriate ombudservices, such as internal and external ombudservices, and such information should be publicly available on an insurer’s website.
The CCIR believes insurers should carry out a diligent review of existing products to ensure … [they] meet the needs of the consumers to which they are most suitable and realign or develop additional products for those consumers that have more distinct needs
Insurers should communicate to consumers how the existing complaints process works, including how to initiate a complaint (contact details) and what options are available, such as internal and external ombudservices where a dispute remains unresolved. Such information should be publicly available on an insurer’s website.
 
Educating consumers/sellers
The Working Group supports the industry’s efforts to improve customer education about its products, and a better understanding of the THI marketplace. But it ‘remains concerned’ that some in the industry are not developing training programmes to ensure adequate training of sellers.
CCIR’s recommendation: Insurers should ensure that any seller, exempt or licensed, has adequate knowledge of the product to be able to explain its key terms and the nature of its guarantee, options, conditions and exclusions, and provide reliable information/advice on the product or know when and where to direct the consumer for information/advice.
 
What’s next?
THIA has just released to its members, and the industry generally, a Travel Insurance Study Guide, which has been in the works for over two years, and which addresses some of the issues proffered by the CCIR. The nine-chapter Study Guide is designed to serve as an in-depth insurance course and exam for travel insurance professionals, dealing with licensing, training, sales, claims, product development and issues such as disclosure and fair practices for sellers of insurance. 
The CCIR concludes that though the THI industry has proposed a number of initiatives, some of which have begun, it will take time to affect the THI marketplace. How effective they will be is not clear, says CCIR, but it will be monitoring and evaluating the progress as it goes along. 
It will be watching.