Exclusions and Restrictions

April 21, 2017

We all agree that there is a role for health insurance in the Fijian health care system, provided it delivers tangible value to consumers. It is crucial that consumers have the trust and confidence that their policies will give them access to treatment when the need arises.

Consumers purchase health insurance policies for their peace of mind knowing well that they are protected from unforeseen health costs. A medical emergency can strike at any time without any prior warning. Buying health insurance protects consumers from the sudden, unexpected costs of hospitalization which would otherwise make a huge impact on the household savings that can lead to indebtedness or lack of care. Health Insurance protects consumers financially in the event of any unexpected serious illness or injury that could affect consumers’ ability to pay.

But how meaningful is it to have a medical or health insurance cover for Fijian consumers?

Consumers don’t fully understand how coverage actually works until they get sick and then are surprised to learn that their plan doesn’t pay as much, or at all, for care they thought would be covered.

From the complaints received by the Council and the comprehensive research it conducted in 2008 on the insurance sector in Fiji, it can easily be identified that consumers face a lot of problems with their health/medical covers particularly when it comes to exclusions and restrictions.

One of the biggest challenge is product complexity. There is an increase in the number of exclusionary and restricted products in the marketplace. In an effort to limit premium hikes and to reduce the benefits paid for treatment, private health insurers are moving towards less-than-comprehensive private health insurance policies. These policies, known as ‘exclusionary’ policies, are actually changing the dynamics of private health which is poorly understood by both, consumers and policy makers.

Premiums are soaring while more procedures or treatments are being excluded from coverage or subjected to “excess” payments that require patients to pay a portion of the bills. Out-of-pocket healthcare expenditure is a major concern. Consumers are led to assume that their insurance covers these fees but they find out later that this is not the case as they are expected to pay high out of pocket expenses.

An exclusion for pre-existing conditions is common in health-related insurance policies. Pre-existing conditions are medical conditions that existed before an insurance policy is taken out. Insurers usually exclude claims arising from pre-existing conditions because insurance policies are intended to cover unexpected occurrences.

While handling complaints, we have seen problems that arise either because the consumer is unaware of the exclusion; or if they are aware, they do not understand what it means in practice – or are unsure about what, if anything, they need to declare. For example:

  • Should they tell the insurer about the skin rashes they suffered few years ago
  • Should they tell the insurer about the medication their doctor had prescribed for high cholesterol few years back?
  • Should they disclose that their father has had angina 20 years ago?

Unfortunately, while declining claims, insurers do not render any consideration to the fact, whether the insured was unaware of the pre-existing condition at the time when the policy commenced. Such was the situation in Ron’s case.

Ron obtained a medical insurance for his wife, daughter and himself. His policy commenced after paying a total premium of $2,540.84.

Ron’s wife, however, fell ill within the term of the policy. She suffered from slurring speech and severe headaches. Upon medical examination, the medical practitioner advised that Ron’s wife needed urgent medical treatment as there was a possibility that she had developed a brain tumor.

After diagnosis, Ron decided to seek assistance from the insurance company. Most unfortunately, the application for treatment was declined by the insurer. The insurer advised that Ron’s wife did not correctly disclose her pre-existing medical condition at the time the policy was purchased.

This pre-existing condition highlighted by the insurer was a mild stroke that Ron’s wife had suffered in 2012. However, given the necessary treatment at the time, she had recovered quite well and did not see a reason why this should be considered as a pre-existing medical condition.

When the Council sought clarification from the Insurance Company, the insurer persisted that Ron did not disclose this information. The Company cancelled the policy and refunded the premium paid by Ron.

To avoid such situations, it is important to disclose all information to the insurer to avoid problems later.