First published in ITIJ 94, November 2008
Small print, denied claims and problems obtaining cover have all helped to give insurers a negative public image. Milan Korcok asks whether travel insurers are losing their clients’ trust, and if so, why
As never before, Caveat Emptor has become the rule for travellers placing trust in those promising to transport them, protect them, and deliver the goods and services they have worked so hard to pay for. Holding on to trust, however, is not easy in the wake of the high-profile collapses of Zoom Airlines (connecting Canada and Britain), or the failure of UK-based XL Holiday Group, stranding 90,000 vacationers in some 50 destinations overseas. It is equally devastating for people caught in contracts they don’t understand, as in the case of a 19-year old British student who crashed a moped in Vietnam but was denied medical or repatriation cover because he had the ‘wrong kind’ of motorcycle driver’s license.
Despite all the signs of contrition and compassion shown by the operatives at Zoom, or XL, or Boots Gap Year Travel Insurance, displaced clients are unable to understand why they fall between the cracks. They get angry and cynical and are easily convinced that the decks are stacked against them by contracts they are not really meant to read, even though they are exhorted to do so. And so when the moped driver’s father has to pay £25,000 to repatriate his son from Vietnam to London because of what he considers a well-buried technicality, the trust binding insurer and client takes a terrible hit. If this were an isolated case it wouldn’t attract the attention it has, but during this summer of financial slaughter, it’s just one more drip of bad blood.
Not the whole story
In September, American Express reported that almost one in four Britons were planning to travel abroad without insurance – despite the recent news of the XL collapse. The reasons stated for those choices were primarily economic – rising cost of living, money
shortages, cutting back on those items that seemed dispensable, like travel insurance: keep the holiday, maybe less lavish, but cut the frills.
In another poll released earlier in the summer, only 49 per cent of Canadians said they always or usually buy travel insurance when crossing into the United States, almost 43 per cent saying they never or rarely buy it – despite the admission by most that they know their government health insurance will not cover them abroad. And in the United States, a poll done by the US travel insurance industry shows that only slightly more than four per cent of travellers specifically seek out dedicated supplemental health insurance when leaving the country.
the relentless expansion of travel … has forced insurers to add more bells and whistles, but also to be far more rigorous in identifying risk factors before committing to contracts with customers.
Thirty years ago, the purchase of travel insurance was a relatively simple business. You got your one-page contract at a dispensing machine at the airport: no pre-existing conditions. Period. But today, more and more travel insurers are in a Catch 22 of their own making: promising more, chasing bigger and more diversified markets, forced into building better firewalls to protect their risk, then catching hell from the public and the media for loading up their policies with too much fine print. Though the apparent reluctance to buy travel insurance may be partly economic, some is clearly borne of a deep suspicion and skepticism that insurers have it all one way; that all they want are the young and the healthy, and those 32- page policy contracts are there to fireproof the insurer more than they are to provide a safety net for the traveller.
As publisher of a consumer-oriented website for travellers seeking information about travel insurance, and independent ombudsman reviewer for clients appealing claim denials by Canadian travel insurers, I have intervened in hundreds of cases where poor communication was the main culprit underlying denials. Either individual clients (or their agents) did not understand or adhere to the terms of their contracts, or insurers failed to clearly explain the terms they were offering. Usually, they explained their benefits well: their exclusions and restrictions, far less well. Rarely did the clients deliberately try to distort information about themselves (though there was occasionally a tendency to forget inconvenient truths), and hardly ever did the insurer deliberately distort information to solidify a denial, although there was incidence of sloppiness, negligence, ambiguity and opacity that achieved the same result.
Trust loves simplicity
It is not rare for me to receive queries or complaints revealing a deep distrust of conventional travel insurance: such as the correspondent who spends his winters in Mexico, but instead of getting travel insurance buys an air ambulance repatriation service which, he says, will ‘get him home fast’ in case of emergency. He prefers this option because air ambulance plans have ‘virtually no fine print’, only a few easy-to-read pages that explain what they do; while insurers ‘have a penchant for hiding things under the fine print’. He says that if he has a routine medical problem or a broken bone while in Mexico he pays as he goes locally and finds the medical services both cheap and of high quality.
I respond that medical emergencies don’t always allow the warning he may need to put that plan into action, but he is willing to take the risk because of his skepticism of what lies the insurer’s fine print. He concludes: “I agree that we should all thoroughly read their convoluted policies before we sign up, but how many people do we know who have ever done it?” How many indeed?
Once broken, trust is devilishly difficult to fix. And such a fix is seriously impeded by a fundamental skepticism that people worldwide have about their dealings with insurers as an industry group. This past summer, the highly respected Edelman Trust Barometer, a scientifically credible survey done annually by the Edelman international public relations firm, showed that of all industry groups (including technology, biotech/life sciences, banking, automotive, healthcare, and consumer packaged goods), insurance and media companies were the least trusted globally by 46 per cent and 45 per cent of respondents respectively. In North America, insurance companies had a 49 per cent trust level, media companies 44 per cent; and in Europe insurance companies achieved only a 35 per cent trust ranking while media were at 40 per cent. The survey was done in 2008 among over 4,000 opinion leaders in the 25 to 64 year age group in 18 countries.
You need me but do you love me?
The age-old complaint about travel health insurers is that they fail to cover those who need it most. A paradox, but true. Economic realities make it true. Maybe that’s why insurers can’t expect to be loved – even though without their products, millions of people couldn’t afford to leave their borders.
Example: a query to my website from a Toronto man with HIV. “I have been very stable for quite a few years with CD counts remaining about the same and a viral load that was undetectable. My understanding of travel insurance is that insurance companies could relate any type of illness that comes on while I am away to the HIV and thus I wouldn’t have any coverage.”
In attempting to help him find cover, I canvassed polices from some of Canada’s largest travel insurers. Some stated right off the top that an applicant with HIV was ineligible for cover, and, though frustrating, that saved a lot of time. But researching others took more work. I noted that some policies stated outright that HIV would be treated as would any other pre-existing condition i.e. if the symptoms were stable for 90 days prior to application (virtually impossible considering the tests and medication alterations necessary to control HIV levels). Others stated that my correspondent would be covered for anything unrelated to his HIV. But to find these variations in cover and navigate their contradictions we had to go far beyond the summary of benefits, the key points of the plan, past the definition of ‘stable’ and ‘pre-existing condition’ to find the bottom line. In one, we went as far as page 19 of a 34 page contract to find that though he might have been eligible for cover according to the wording of the summary and the definitions, he would have been eliminated by the General Conditions – in the bowels of the contract boiler plate.
It is these fine print ‘gotchas’ that fertilize the negative perceptions of the travel insurance industry. In the case of James Pinnington, the Vietnam moped victim, his insurer Boots said: “Our Gap Year Insurance policy wording clearly states that a claim will not be paid ‘arising from using a two wheeled motor vehicle as a driver or passenger if you are not wearing a crash helmet and the driver is not a holder of a full UK class A motorcycle license’.” Pinnington did not have a full UK class A motorcycle license, a law not officially applied in Vietnam. In his defense, the Consumer Action Group (CAG) argued that insurers should be clear with customers when selling travel insurance and that in this case this requirement should have been contained in the ‘Key facts’ booklet, whereas it was only stated on page 13 of a 64-page document.
Furthermore, the Association of British Insurers, which denies that its insurers use ‘small print’ to avoid paying claims, noted that last year its members paid out £200 million for people who fell ill or had accidents overseas, and that more than 20 million people took out some form of travel insurance in Britain, of which just over four per cent (850,000) filed medical claims.
Where will it end?
With the relentless expansion of travel, insurance has become more complex because it is covering more people, sicker people, clients who want cover for everything from white water rafting to golfing in the desert (with appropriate cover for their expensive clubs), as well as those traveling to places that range from exotic to outright dangerous. This has forced insurers to add more bells and whistles, but also to be far more rigorous in identifying risk factors before committing to contracts with customers.
When does the requirement for patient medical information go over the top?
Now, it is rare to find a policy that does not cover pre-existing conditions to some extent, but the language describing the exceptions to that and the pages-long medical underwriting forms that must be completed can be traps for the innocent or unwary. When does the requirement for patient medical information go over the top? When is it just too much for the medically-untutored customer to handle? For example: how reasonable is it to ask an aging applicant the following question on a self-administered questionnaire? ‘Have you (in the past five years) had an aneurysm greater than four centimetres in size – diameter, width or length, which remains surgically untreated?’ Or ‘(Have) you had cardiac valve stenosis or cardiomyopathy with an ejection fraction of less than 40 per cent or a ventricular function grade of 3 or 4?’ – part of an application in one of Canada’s most popular travel plans for seniors.
Many elderly patients are never told by their doctors of a heart murmur, or a low grade heart block that doesn’t require intervention, and are just advised to go ahead with their vacation in the sun and come back when they return in the spring. At their age, why worry them? And then they have an emergency, and an investigation of their medical record shows inconsistencies with their application and they are dunned for a pre-existing condition or non-disclosure. Whether it’s their fault or their doctor’s is irrelevant. It’s a risk the insurer didn’t know about and would not otherwise have undertaken.
“My doctor never said that blackout I had five years ago was definitely a TIA and it never bothered me again so I didn’t think it was worth mentioning.” To the insurer, this is a case of non-disclosure – grounds for voiding a policy. To the insured, it’s a scam – a sleazy effort to dig around in the ruins and come up with an excuse for not paying a claim. Especially egregious since the ‘possible’ TIA had nothing to do with the gall bladder excision that precipitated the $21,000 emergency medical encounter in a foreign hospital.
Non-disclosure of a symptom unrelated to a claim is a tough item to explain and one the media is likely to pounce on with fervour. It looks like a grenade held in the back pocket as a last defense, even though it is perfectly defensible in many cases.
Thirty years ago, the purchase of travel insurance was a relatively simple business … today, more and more travel insurers are in a Catch 22 of their own making
I am often asked by insurance customers if they need a lawyer to buy travel insurance. I take it as a joke and say no, not really, just read the fine print and make sure you understand it – a statement that tests my own credulity. And then I realize that it is lawyers creating these masses of indecipherable fine print. Perhaps travel insurers need to turn the mirror on themselves and honestly judge if in the process of making themselves fireproof, they are not burning their customers.