Travel insurers in the UK seeking to more accurately assess the risk a traveller presents are increasingly relying on medical screening programs. Tatum Anderson investigates the efficacy of such programs, and assesses their value for insurers outside of the UK
For consumers, getting travel insurance with a pre-existing medical condition can be a painful process, despite the evolution of online and up-to-the-minute medical screening software. All too often, customers with a pre-existing condition still have to fill in extensive forms, answer lots of personal medical questions, declare their condition multiple times, and then perhaps still phone a call centre despite attempting to complete their medical screening and travel insurance purchase online. Having done all this, the premium they are resultantly quoted may be higher than they were expecting or, worse still, they may find cover is declined. Years ago, however, medical screening was even more onerous. Individual cases were referred to boards of medical experts for discussion; and the act of bringing so many professionals together often made premiums prohibitively expensive. There was uncertainty for customers, too, due to the time taken to reach a decision on their cover.
Today, medical screening has become vastly more convenient for consumers and companies alike because it is largely automated – complex algorithms within software embedded into insurers’ websites or operated by a call centre convert the answers to questions about a customer’s health into an underwriting risk score that results in a premium price reflecting the predicted risk. The process may be considered somewhat lengthy by those wishing to make a quick travel insurance purchase, but with UK insurers being required by law to make clear to customers all the information they are required to disclose in order to be considered for cover, the onus falls on them to eke out the facts behind a traveller’s existing medical condition in order to decide if they have an appetite for the risk they present. By gathering as much information as they can about a policyholder’s condition, the insurer also fully understands the risk of them racking up extortionate medical bills in an overseas hospital. As a result, medical screening software has become an indispensable business tool for the increasing numbers of companies selling travel insurance.
Today, despite some medical screening requiring extensive online questioning, both the screening process and purchase of a policy can be carried out over the Internet in a single transaction without the customer having to ring a call centre. This has numerous benefits for the consumer: it is a preferable process for those who may be embarrassed to speak in person to someone about a medical condition they have; it is convenient; the customer can be assured they are receiving cover that is appropriate for their needs, with all medical conditions covered; and it has enabled a greater number of ill and infirm travellers to venture abroad with an affordable travel insurance policy to protect them.
Angela Smith, general manager of Healix Risk Rating, a UK company that provides medical screening software and related services to brands including Insure&Go and AXA Direct, explains that customers have certain assurances when going through the screening process: “Most importantly, customers [then] have clear information at point of sale as to whether their pre-existing conditions are covered,” she says.
Done well, such systems can identify risk very accurately, which potentially makes for lower premiums in certain circumstances and encourages the disclosure of conditions that may otherwise have been forgotten about or even unknown.
For example, as Kate Huet, managing director of International Travel and Healthcare Limited, another UK-based medical screening software provider, said: “Clients often know what drugs they take but struggle to advise what conditions they have!” So, if screening software is accurate enough, and seeks certain information such as any current medication, while also looking for linked conditions and comparing this with known medical information, it can gather a fairly precise picture of a potential customer’s health. This means that an insurer ‘can then price the risk or avoid the risk depending on the appetite for risk that the insurer has indicated’, says Huet. This is obviously vastly beneficial for the insurer, but it might also mean that, with a better understanding of a customer’s medical condition, the insurer is able to offer cover – and affordable cover at that – where previously the insurer may have declined cover on a blanket basis for a customer with a specific condition. This ability to assess the real risks involved in covering a particular condition more accurately is certainly one of the major benefits of medical screening, say the software providers.
In the past, insurers have often reacted over-zealously to entire classes of disease, even though a potential customer with the condition is well enough to go on holiday. As Healix’s Smith puts it: “[The software] eliminates making decisions on cover simply by the condition name alone.”
An extremely high level of accuracy comes at a cost, though. Such systems cost more to develop and they are more complex to administer, but they do enable a new group of travellers to purchase insurance that in previous years would have been denied to them or offered at an extortionate premium. Huet, for example, says that her company’s software is so accurate it can screen 100-year-olds wanting cruise insurance. Cruises are high-value products, booked up to two years in advance, during which time these customers might uncover health problems. Accuracy is, therefore, crucial and why the company’s system is not online, but is instead only operated by highly trained staff. “We combine medical condition information with medication information and Body Mass Index (BMI), cross referencing extensively – we believe this is the most thorough approach,” says Huet.
Shaping the industry
With everyone from banks to high street retail brands providing travel insurance, price competition is intense and margins wafer-thin. Few companies want to risk wiping out those margins with expensive claims, often worth hundreds of thousands of pounds each. This is where medical screening really came into its own. Insurers were given the tools to quickly and easily weed out risky customers, and accurately assess the risks of those they felt they could afford to take on. Indeed, today, many sellers of insurance could not afford to offer policies to those with pre-existing medical conditions without the software, says Craig Morrison, CEO of Southern Cross Travel Insurance, which boasts 98 per cent of sales fulfilled online. That’s what makes it cost-effective, in his view. “It makes it possible to keep the premiums very, very inexpensive because the distribution costs are so low,” he says. “There is no way we could sell so many policies without medical screening being a possibility in the online channel.”
Whether provided online or via a call centre, medical screening has helped insurers to more accurately assess risk when it comes to providing cover to travellers with pre-existing medical conditions. And this had had numerous effects on the industry. Today, screening systems gather and cross-reference different types and levels of information, including where travellers are in the world, which helps determine the risk the traveller presents. For instance, if a UK citizen falls ill with angina in France, the cost of treating them will be covered in part by the French taxpayer because of the reciprocal health agreement between European Union countries. Repatriation from France to the UK would also be relatively affordable. However, if that same citizen becomes ill in the US, the costs are significantly higher – starting with the medical bills, then there are no reciprocal health agreements, and repatriation across the Atlantic can be extremely expensive. The risks taken on by the insurer, then, are vastly different for the same condition, so cross-referencing details such as destination make for a more accurate risk analysis.
Chris Blackman, product development consultant at AllClear Insurance Services, a UK travel insurer that specialises in covering people with pre-existing conditions, says the insurance market is responding to customer demands: “Customers expect to be able to travel anywhere they want to, regardless of their medical history or age and the further they travel and the longer they travel for, increases the risk.” Insurers are meeting this risk and, indeed, automated screening has spawned a niche market of insurers who are able to target the growing number of those with pre-existing medical conditions, including older people with age-related medical problems, deep pockets and free time to take holidays. Accuracy is essential if such companies are to remain afloat.
Some people with pre-existing medical conditions are outside the remit of screening tools, despite the level of accuracy they afford. Despite this, some insurers are willing to screen patients using their own questioning in order to enable them to travel insured.
Many people with advanced cancer, for example, will respond very differently to the same kinds of treatments and go through long periods of time where they actually feel fine. Holidays abroad during these windows of opportunity are feasible without a huge risk of hospitalisation, says Dr Krish Shastri, director at specialist provider InsureCancer, which offers cover for those with advanced cancer and a terminal prognosis. He is of the opinion that medical screening software does not have the in-depth medical knowledge to, say, distinguish between different kinds of lung cancer, let alone work out whether the patient is within that window of opportunity. “To understand the overall risk presented by advanced cancer to insurers, you cannot simply rely on simplistic generic questioning,” he says. “Advanced cancer patients are typically the kind of people who would be excluded from cover by a screening tool.” InsureCancer uses a team of experts to interrogate medical records and talk directly to consultants to determine cover for patients.
More generally, medical screening tools vary widely in their complexity and thus their ability to accurately pinpoint risk. Standard medical screening systems occasionally generalise, or they may err on the side of caution and rate someone as a worse risk than they actually are. This frustrates customers who know their condition well and manage it without problem, say insurers. Medical screening systems don’t all ask the same questions either and can, therefore, produce different decisions on price and cover. Some systems, for example, do not contain an up-to-date medication register or a list of conditions for which a medication can be used – as maintaining such a register adds cost to the software – so it goes without saying that systems that do integrate and utilise such information will provide a more accurate picture of risk and price it accordingly.
Furthermore, a system might work perfectly in some regions of the world, but may not be cognisant of risks in others, such as the travel habits of a population or local regulations. Neither can it detect hesitations in speech that might indicate that someone is deliberately attempting to mislead an insurer. “People with extensive medical conditions know that the premium they pay will be based on what they disclose – so if you have had one heart attack and declare that, why declare that you have had three? Convenient forgetfulness happens on occasion,” says Huet.
And no matter how good software is, there are limitations that arise, particularly with annual policies. Insurers will have a fair idea of the general medical risk of their potential policyholders, although travellers with an annual or multi-trip policy will need (to remember) to update their insurer if their condition changes before they travel. Also, the insurer will not know where exactly the traveller might end up venturing at any point over the period of the policy, so further limitations or exclusions may have to be included in the policy.
Some systems, meanwhile, are limited by those operating them. Take linked conditions, for instance. A traveller might declare condition A first, which produces one risk scoring. However, when they declare condition B, the system might ask questions about linked conditions, including condition A. The system might not realise it has already screened the first condition, and produce another risk scoring for condition A. An experienced operator might be able to override the system, but that might not always be the case.
Huet reckons that systems with cheaper upfront costs will cost insurers more money in the long term in claims. “The cheaper the better [for some insurers],” she warned, “and maybe less attention is paid to the performance a scheme will deliver as a result.”
But perhaps the most crucial limitation to risk-rating systems is the ability to assess the most complex cases. Software providers, understandably, say their systems will never be as accurate as a two-way conversation with a fully qualified physician, with a customer’s medical history notes. The decision for insurers, then, is how far are they willing to go to unearth the full and true medical risk a person presents.
Insurance providers say there are ways around many limitations within medical screening software. AllClear Insurance Services, for example, which uses the software to help cover customers who are currently receiving medical treatment or have been given a terminal prognosis, also allows customers to web chat with its agents or contact a call centre, and the software is constantly being developed to improve accuracy. As such, algorithms are constantly updated – they must reflect any newly issued guidance on how to treat a particular condition in individual countries, for example. So, if new guidance were to be published in, say, Germany, requiring patients with a particular condition to have a CT scan plus ongoing monitoring once they leave hospital, the medical screening system would be tweaked to include this information and allow it to be used in its algorithms. Such guidelines would inevitably have an impact on risk rating within the system, because an additional CT scan and overnight accommodation, if the patient cannot be repatriated immediately when released from hospital, incur extra costs for an insurer.
New legislation in the UK, which came into effect in April, has also resulted in an overhaul of screening software. The Consumer Insurance (Disclosure and Representations) Act 2012 requires insurers to make it explicitly clear what consumers are expected to disclose. Healix is one of the companies that modified its software to reflect the changing legislation. Instead of asking a customer with, say, diabetes to disclose any related conditions separately, the software now presents a list of possible conditions to choose from once it knows they have diabetes. It then automatically guides them through questions for each condition, thereby taking the onus off the user to remember every condition they might have.
Additionally, software companies are starting to collect mountains of data from insurers to update the risk profiles for the health conditions loaded onto their systems, which in turn allows them to fine tune risk scores. Heart-stenting, for example, might be given a relatively high risk score by an insurer – so the insurer either does not cover it, or charges a higher premium to cover it. However, if data reveals that after three years there are no claims relating to stents, the software can be adjusted to lower the risk score, explains Southern Cross Travel Insurance’s Morrison.
But just because medical screening technology exists, it does not follow that it will be used. Some countries or regions sell travel insurance in different ways, in markets that have developed at a different pace or along an alternative trajectory.
In the US, medical screening is not done as a matter of course, according to the US Travel Insurance Association (UstiA), although some comprehensive travel insurance policies sold in the US waive pre-existing medical conditions if certain requirements are met – stipulations such as the travel insurance policy must be purchased within two weeks of initial trip payment, the medical condition is under control, or that medication has not been changed within a certain amount of time prior to the trip. Without a waiver, pre-existing health risks are not covered. “Medical screening is not relevant to most travel insurance in the US. One does not need screening to purchase travel insurance here, period,” said a spokesperson for the UstiA.
The picture is very different in Europe, too. For a start, there has not been the explosion of companies selling insurance for travellers with pre-existing medical conditions that has been seen in the UK. Fewer people buy online in Europe, too, so there is less need for automated screening. In Europe, it’s still travel agents and airlines that sell the lion’s share of travel insurance, rather the numerous types of company seen in the UK, with their different sales channels and policies – especially those aimed specifically at travellers with pre-existing medical conditions.
Regulations are less stringent in Europe than in the UK, and this too has had an effect on screening development. UK regulations force sellers to more explicitly display terms and conditions, which has led to greater consumer awareness of the importance to declare their medical conditions, says Simon Powell of Travel Insurance Consulting, who has conducted a dissertation on medical screening across European countries. In Europe, the situation is markedly different: “There is simply not a requirement at point of sale to display key terms and conditions – such as the exclusion of medical claims for customers with pre-existing conditions,” he says. Thus, consumers with pre-existing conditions are often unaware that they might be excluded from cover and subsequently do not explicitly search for better policies. And as such, there has not been the demand for policies with medical screening facilities.
It’s a situation that is tacitly accepted by the industry, says Powell. Insurers are wary of providing medical screening for fear of upsetting the agents and airlines that resell their products, he adds. They worry that undergoing medical screening will put the average consumer off buying the entire travel package. Another factor limiting the development of the online screening channel in Europe is less competition, according to Powell: “Insurers I spoke to were non-committal on the subject [of screening systems]. However, with all of the other factors mentioned and the undoubted expense of systems development, there seems to be a compelling enough argument not to pursue a project of this nature,” he says.
According to John Thain, president of the Travel Health Insurance Association (THiA) in Canada, most major Canadian insurance providers offer medical screening, although not all will provide customers with an online solution that they can purchase. “Typically,” said Thain, “medical screening is meant for the snowbird/senior traveller, although it is available for all ages through some providers.” Thain recognised as ‘an ongoing issue’ the problem of customers knowing and disclosing all the relevant information. “Since the financial consequences can be significant, THiA recommends all travellers consult their healthcare providers and their insurance company for assistance with completing medical questionnaires. Continued consumer education is vital to stress both the rights and responsibilities of the applicant.”
For their part, software providers who are busy providing medical screening solutions in the UK and beyond reinforce the fact that it’s insurers who decide their appetite for risk, not the software. “It reflects risk against the cost of medical claims, allowing our clients to determine where their appetite for risk sits, thereby reflecting their business requirement,” says Healix’s Smith. This certainly allows for flexibility in a medical screening programme, allowing insurers to tailor medical screening solutions to their own needs. This has taken screening solutions in various directions – from very basic automated screening models, to those that with human input can provide travel insurance cover to those people who just a few years ago were deemed ineligible for cover. To know that medical screening has enabled more people to travel with insurance cover in place; cover that is tailored to their needs and is offered at an affordable rate, can only be a good thing.