Aviva Medios Healthcare - are we being treated fairly?

burtwood

PMW2012’s Post on 9-11-2012 at 10:31am informs us that Aviva admitted to him “there wasn’t one” when referring to a sinking fund. That’s something Aviva previously refused to admit to and is worth explaining as it’s a key driver for Aviva depriving policyholders of their Guaranties. If one continues Guardog’s excellent theme on Aviva’s selectivity with facts and truth, THIS IS A SUBJECT THAT AVIVA REALLY DOES NOT WANT TO TALK ABOUT, AT ALL.

It’s worth explaining that the Medios policy is a ‘level premium policy’ that’s more expensive from the outset but ends up cheaper later in life – those with greater interest can refer to a 6th April 2002 article from The Telegraph headed Pick Level Best For Long Term (through a search engine search enquiry - unfortunately this system does not permit web references). Actuarial calculations at the start determine a level premium that is applied throughout the product’s life. For this to work, elements of the premiums must be retained to cover and absorb future extra costs from increasing age. The net result is that premiums never rise except for inflation.

The premium elements covering the future extra cost of old age are set aside in an Equalisation Provision – referred to by PMW2012 as a sinking fund. That Provision is then applied to cover extra old age costs when they are expected to arise. An explanation sometimes given by sales/advice staff and detractors is that New Entrants end-up paying for the extra costs of existing older policyholders; however, that’s a misnomer as long as an Equalisation Provision is properly operated – required by both Statute and Regulatory Rules.

PMW2012 has assumed that no Equalisation Provision was transferred to Aviva’s Health subsidiary when Commercial Union and Norwich Union set-up this arrangement. That might or might not be correct. However, that related to around 5 years of this product’s history and that history now extends to some 17 years. That means most of the fault lies with Aviva (apologies for pun). It has seemingly plundered all premium elements intended to cover future extra costs; apparently, it took those funds immediately to benefit its own income/profit. Consequently, when that Provision is needed to cover increasing old age costs, nothing remains to meet those costs and mounting losses must result. That’s the reason Aviva wants to exit this product and jettison its massive liabilities to policyholders.

Aviva is also likely to have got caught-out in a wrong calculation of the level premium because old age costs have increased faster than expected. Obviously, Aviva wants to avoid that extra burden irrespective of having charged policyholders for taking that risk and, apparently, irrespective of whether that’s achieved through fair or foul means.

The net result is that Aviva, apparently, misappropriates the entire value of policyholders’ Guaranties for its own benefit. Around 2005, that strategy required it to breach a key product feature when it limited the product life to a time of its own choosing; that caused policyholders to unwittingly become the fall guys for all Aviva misdeeds. For Aviva, it was either killing the need for a Guaranty pot (Equalisation Provision) or having to provide a lump sum provision in the hundreds of millions, as mounting losses would have alerted auditors and its Regulator to that need. January 2010’s stopping of New Entrants, and consequential Guaranty breach, was the next stage in that strategy. Misrepresenting that position in successive Terms was how Aviva then hid that particular Guaranty breach. The ‘final act’ took place last year, when Aviva, reportedly, told certain brokers it was closing the Medios book of business. However, brokers’ angry responses caused Aviva, instead, to encourage policyholders’ exit through a 12% premium increase and a one-off introductory discount for its alternative Healthier Solutions policy. Now Aviva has retained that 12% increase for 2013 with the addition of inflation. Consequently, premiums will get ever larger through continuing repetition and inflation. Once more, the purpose is to get policyholders to pay for risks Aviva had taken on and had previously charged for.

Aside from the FSA’s and FOS’s reactions , the above Aviva strategy presents it with no downside as its Guaranty problem disappears whenever policyholders decide enough is enough and walk away; even better for Aviva if that can be achieved through transferring them, forcibly or voluntarily, to its Healthier Solutions policy. Of course, Aviva tells policyholders nothing about the value of their Guaranty, even refuses, as to do otherwise would destroy its purpose and cause policyholders to be informed of their Guaranty’s value, assuming that Guaranty was properly operated.

Aviva’s defence against its misdeeds is likely to be that the Medios policy is a 1 year contract, as identified in Guardog’s 20th November Post. As such, Aviva is likely to contend there is no long term commitment and all liabilities terminate each year. That is a difficult defence to sustain as
(a) the terms of most policies are between 10 and 16 years, and
(b) even Exeter’s 1 year policy stipulates the need for provisions to be made to cover future extra age costs.
The only out for Aviva is to demonstrate an intention to terminate the policy within the short term. However, that’s not possible as Aviva needs to defend its change from lifetime cover availability. It’s also not possible as another key product feature is that the Guaranty cannot be lost. Reminds one that there is no respite for liars and we now know that Aviva does not seem to care who it tells lies to.

The FSA might be upset on catching-on to what has happened as Aviva would seem to have been declaring incorrect Equalisation Provisions in its regular financial reports to that Regulator – especially important, as such misreporting impacts directly upon Aviva’s Capital Requirement. As Guardog said in his 20th November Post, the FSA should also be upset by Aviva’s efforts ‘to drive a coach and horses’ through its Rulebook obligations to treat customers fairly. Aviva’s auditors, Ernst & Young LLP might also be concerned to be caught-up in this as they are already tarnished by their involvement in Equitable Life’s Guaranty debacle. Policyholders are certainly upset about Aviva’s misdeeds and are working to ensure justice. Industry participants will follow any precedents that are set by this case.

Lawton

A further misdeed of Aviva’s has come to light.
YET ANOTHER APPARENT DECEPTION.
Could be the ‘final nail in Aviva’s self-made coffin’.

Details of this apparent deception are currently sitting within the in-trays of the FSA and FOS.

Any Aviva representative reading this might want to consider whether earlier confession might mitigate the resulting furore.

The intent is to Post details on this Forum within the next 2 weeks
thus giving appropriate opportunity for investigation and dialogue.

Lawton

Aviva’s new misdeed is hidden within its 2013 renewal documentation.
Like previous misdeeds, Aviva seeks to accomplish this through tinkering with a few words here and there, so as to cause dramatic and covert change.
In the past Aviva’s tinkering was achieved through adding one or two words; this time it’s deleting them.
Either way, the change and effect are hidden from policyholders with a total absence of information.
Aviva then diverts their attention to unrelated changes.

This time Aviva’s covert change is to policy structure.
That’s despite that same structure having been in place since almost the first moment of Aviva’s involvement with Medios policies.

Aviva’s motivation is clear.
Its central defence against policyholders’ complaints is that its policy is a 1 year contract.
However, existing policy structure conflicts with that defence.
Therefore, Aviva must alter that structure ‘by hook or by crook’.

Deception seems a factor as Aviva employs the trickery detailed in the above first paragraph.
Worst still, there seems premeditation as a 3rd October advance letter from Aviva stated:
“The admin change will not affect the principal terms and conditions of your policy although there will be a few minor alterations which will be explained in a guide enclosed with your renewal documents“.
Certainly, a fundamental change to policy structure cannot be fairly described as minor.
Nor could it be considered to be minor when its effect is to remove a key weakness in Aviva’s defence; a crucial act as it is difficult enough for Aviva to pretend that policies, with individual terms of 10 to 15 years and continuing, can be 1 year contracts.

This 2013 alteration to Terms redefines the Policy Schedule as:
“The schedule giving details of (amongst others):
the Policyholder + Insured Persons + amendments and + exclusions that apply to specific Insured Persons (if any)”.

Currently, and for some past 10 years, that definition has been:
“The schedule giving details of (amongst others) the premium, Policyholder and Insured Persons and endorsements (if any)”.

The key difference is the omission of only two words - “the premium”. That omission is almost invisible within a document and accompanying guide that contains some 6,000 plus words. Gone is the prime first subject of “premium” as part of the Aviva effort to dismember Policy structure. Yet, structure is fundamental to any policy, especially when it has been in place for so long.

Clearly, the Terms to date identify that each year the Review Date premium notices gets added to and become part of the Policy Schedule. As such, the Review Date premium notices take on the status of the Policy Schedule. However, that status conflicts with Aviva’s pretence of a 1 year contract. Consequently, Aviva seeks to dismember premium information from the Policy Schedule. The intent is to present the premium as a stand-alone matter that can no longer contradict its 1 year contract claim.

Now this Aviva misdeed is found-out, all it achieves is to confirm that even Aviva knows that history must be rewritten to advance its claim of a 1 year contract as there appears to be no other support for that claim. This is equivalent to Aviva denying its own 1 year claim.

The FSA has been requested to add this latest misdeed to a previous formal request for relief under the Unfair Terms in Consumer Contracts Regulations 1999.
Readers should also note that this alteration seems to go well beyond Aviva’s powers to change solely standard terms; any other powers it granted itself were ultra vires.

One more comment must be added about Guaranty wording within 2013’s Terms. It still includes and relies upon non-existent New Entrants and therefore some 3 years of misrepresentations continue unabated for another year.
This is a serious matter as each such action appears to breach the Misrepresentation Act 1967.
It seems Aviva continues with this shameful deception as it does not want to admit to previous misrepresentations nor to its New Entrants’ contract breach.
The present repetition of that wrongful act could well be influenced by Aviva’s awareness of this element of its Terms being under most scrutiny due to the force of policyholders’ complaints.

POLICYHOLDERS WILL ONLY BE HEARD IF THEY COMPLAIN ABOUT AVIVA’S INJUSTICES.

PMW2012

Can I recommend that you look very closely at your renewal schedule (the personalised information) and check it carefully.
Mine (Medios Optional cover) was incorrect showing an incorrect premium calculation although the total premium to be charged was correct. My brokers said that they have had a couple of sets of incorrect documentation.
It was agreed by Aviva towards the end of November that they would immediately issue a letter confirming that the renewal letter was incorrect as to resissue it was not possible due to an IT error to be corrected in 2013........I am still waiting.
If you find an error in your own renewal I suggest you write to your broker to get it corrected but at the same time write to the Health Director of Aviva, Mark Noble at the Hampshire address and copy in The Chairman of Aviva John McFarlane at Aviva's Head Office 1 Undershaft in The City as I have. This error information should also be sent to the FOS as well.
It would appear that whilst the good old Medios team who are drafting these letters cannot get their supervisors (Aviva staff) to sign things off from what I hear.
What a mess.

Concerned.1_2

Hi

I wonder if anyone would post a draft of their complaint to Aviva. It would ensure that all of us are making the same points in our complaints.

Guardog

Happy Christmas to everyone.
Just seen your question Concerned.1 prior to leaving for festivities.

An update to previously provided possible templates is as follows. The one to FOS needs to change if new information is provided by Aviva in its complaint response.

Letter to Aviva (as only when unsatisfactory response received can complaint be made to Financial Ombudsman Service)

Aviva Health UK Limited
Chilworth House, Hampshire Corporate Park,
Templars Way
Eastleigh
Hampshire SO53 3RY [Date]

Dear Sir/Madam

Policy Number: [ ]

I request an explanation for 2012’s large premium increase, which has been maintained and further increased for 2013. Please also confirm and explain why no part of those increases relates to matters covered by the Guaranty.

As a result of these shock premium increase, I have reviewed my policy documentation. I am particularly dismayed to discover that availability of lifetime cover seems to have somehow disappeared and would be grateful for an explanation.

Due to that discovery, I also request confirmation that the New Entrants’ provision in the Guaranty remains valid and relevant, and please also confirm no action has been taken to impact upon New Entrants.

Please also explain the following aspects of 2013’s Terms:
- reasons for changes to conditions, and
- exclusion of the premium from Schedule definition after some 10 years of its inclusion, including reason for lack of any given explanation.

Please treat this letter as a Complaint as the above matters cause immense distress.

Yours faithfully

[name]

Letter to Financial Ombudsman Service

Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London E14 9SR [Date]

Dear Sir/Madam

Complaint against Aviva Health UK Limited with respect to Medios Policy Number [ ]

I first purchased the above Health Care Policy in [date of inception]. It provided the following essential characteristics:
- a Guaranty of only one Age Related Increase when reaching the next Age Band after joining;
- continuing New Entrants for determining the one Age Related Increase;
- availability of lifetime cover.

Those characteristics were crucial to the policy’s marketing and to my purchase. The resulting premium was considerably higher than alternative health care because of the policy’s essential characteristics.

Following the above policy purchase, there was a change in insurer ownership; the new owner was Aviva. That change occurred in 2000 and Aviva distributed a new policy, at that time, which clearly re-stated all the above essential characteristics.

In the 2012 policy year, Aviva increased my premium by 20%. That increase was maintained for the 2013 policy year, with an increase for inflation. Yet a large part of the base 2012 increase makes no sense in relation to the Guaranty. I seem to have been wrongly charged for costs that Aviva is responsible for under its Guaranty, and I have paid for that Guaranty benefit since my policy’s inception.

Much more importantly, the wrongful premium increases caused a review of my documentation and I now discover the availability of lifetime cover has been removed. I also have become aware that New Entrants have been stopped. In addition, I cannot understand how Aviva could grant itself powers that went beyond its original authority to change only Standard Terms.

I further note that New Entrants were stopped by Aviva in January 2010. That was obviously known about and planned when Aviva collected my premium for that year. However, Aviva did not then communicate its wrongdoing. Worst still, Aviva knowingly misrepresented the New Entrants’ situation in its Terms & Conditions for 2010, 2011, 2012 and 2013, as Aviva showed them as continuing in connection with the determination of the one Age Band premium increase. Obviously, I would have challenged the situation previously if Aviva had informed me of its Guaranty breach; I would have continued my policy only to protect my rights. Knowing then about that breach would also have alerted me to review my documentation and that would have led to the earlier discovery of Aviva’s removal of lifetime cover.

The above removal of almost all the policy’s essential characteristics means I have lost my Guaranty and I claim for:
- the value of that lost Guaranty;
- the premiums for 2010, 2011, 2012 and 2013 (including the element of 2012’s and 2013’s covered by the Guaranty) as I would not have continued my policy other than to protect my rights;
- [ongoing health care cover at no cost from Aviva for existing conditions I am unable to obtain cover for (I am aware such cover might be available if I exchanged my current policy for Aviva’s Healthier Solutions policy but am concerned that it does not meet my needs as its premium is geared to no claims being made)];
- distress and inconvenience.

I have complained to Aviva and enclose a copy of Aviva’s unsatisfactory response to my complaint (copy also enclosed).


Please note my policy term is # years. This contradicts Aviva’s assertion that it is a 1 year contract. I further note that, over the last 10 years, my Policy Schedule included the Premium. Its exclusion, without explanation, in Aviva’s 2013 Terms seems a belated and wrongful attempt by Aviva to alter policy structure. From this, one surmises the Review Date Premium is the basis for Aviva’s 1 year contract claim and its Policy Schedule status conflicts with that wrongful assertion – as obviously does the # year term of my policy.

Please further note that Aviva claims it may vary Terms at each Review Date (which it refers to as renewal) but such assertion conflicts with Aviva’s first agreed Policy when only Standard Terms were agreed as being capable of variation.

Yours faithfully

[name]

davidstone

Forum dialogue is being conducted online AND through direct emails between Users.
That’s because some Users prefer direct emails that are not open to Aviva snooping.
Their concern is that Aviva gets away with anything, however appalling, due to:
- over-respect for the Aviva name,
- Aviva’s arrogance to do what it wants, and
- Aviva’s desire to save itself hundreds of millions through casting-off Guaranty responsibilities.

Such concern is confirmed by Aviva lies of a 1 year contract and of Terms variable at will.
Those lies misled through not mentioning:
- a policy term that in most cases exceeds 15 years,
- the improper authority to change Terms beyond Standard provisions,
- the Review Date premium’s status as solely part of the Policy Schedule, and
- how the Policy was sold with a life-time available Guaranty that could not be lost.

It’s not surprising that Aviva initially wrong-footed Organisations intended to protect policyholders.
Certainly, Aviva made no attempt to correct wrong impressions.
Having introduced lies, Aviva needed to cover them up through repeatedly affirming them.

To be fair, policyholders were similarly misled when Aviva:
- improperly sought to grant itself the authority to change more than Standard Terms under the cover -story that change was necessary as part of an industry-wide initiative for easier comparisons,
- engaged in subterfuge to change the lifetime-time available and non-losable Guaranty to a policy that could be stopped at any time,
- removed the baseline of their Guaranty when it stopped New Entrants and with-held that information from policyholders, and then even misrepresented the New Entrants’ position in successive Terms and Conditions.

Equally, the FSA might have been misled for years through Aviva’s possible wrongful reporting of provisions used in the calculation of its Capital Requirement. That’s because Aviva seems to have taken the full income benefit of Medios premiums when they were received, without proper provision for the future Age Cost Increases they were supposed to cover. The extent to which the FSA might have been misled should become clear following its investigation, together with any related concern over false accounting whether or not that also includes Aviva’s Statutory Financial Statements.

What remains of this policy is unrecognisable from the contract policyholders entered into, where they paid well above normal market rates so that much later in their lives they achieved an overall benefit through premiums that included no Age-Related Increases.
The recreated policy offers no overall financial sense as it might not even be available when the original age-cross-over point for net benefit is reached (irrespective of any extended cross-over point resulting from 2011’s wrongful premium increase or from the removal of the New Entrants’ baseline protection).

An MP’s involvement, to assist putting policyholders’ case to the FSA, led to another Aviva lie; again the purpose was to cover-up Aviva’s misdeeds and to continue its effort to cast-off Guaranty responsibilities.
Worst still, Aviva’s lie was to misrepresent FOS’s position.
The result was that MP, the FSA and FOS also then became victims of Aviva’s contempt.

Aviva did not stop there.
Not even after being found-out with its lies and contempt for all.
To divert attention away from policy terms of 15 years and more,
Aviva sought to redirect focus, once again, towards the Review Date Premium.
Characterising that as an Annual Renewal was insufficient as that solely had Policy Schedule status.
Consequently, Aviva covertly sought to remove that Policy Schedule status, so its lies might become less obvious.

The result of all this is that Aviva’s name and claims now have an entirely different impact.
Aviva has been found out.
‘The emperor has no clothes’
Users no longer need to email directly to one another.
Hopefully, the game is up for Aviva and market confusion can disappear.

A Happy and Healthy New Year to all.

Maytops

I thought it might be useful to share a copy of my complaint letter sent to the ombudsman a year ago:

''I am writing in connection with complaint XXXXXXXXXX and enclose copies of the relevant correspondence with Aviva.

I remain deeply unhappy with Aviva’s final response and would be grateful if you could investigate.

My Medios policy protects against age related increases. Aviva do not dispute this. Nevertheless they believe they now have the right to increase premiums to cover the cost of the Guaranteed Loyalty Bonus.

Aviva claim that charging for the Guaranteed Loyalty Bonus is not the same as charging age related premiums. In my view the words may be different but the financial intent, and the burden on the elderly, the most vulnerable of policy holders, is identical.

I first bought the Medios policy in 1998, at age 50, mainly because the policy protected me against normal age related premium increases. I was persuaded by Medios to buy their policy because they told me that they would fix my premiums at the level normal for 50 year olds even as I grew older.

The Medios policy was unique in this regard. Both Medios and the intermediary who introduced me to the policy made it clear that premium increases should be expected but only in relation to general medical expense inflation.

Had the Medios policy in 1998 indicated on its face that it was the insurer’s intention then, or at some later date, to charge premium for contributions to the Guaranteed loyalty bonus I would not have bought the policy. I also doubt whether any other policy holder would have bought it either, as it would have been obvious that the protection offered by the policy was a sham.

In what way, it would have been asked, would the policy have protected against age related increases if Medios retained the right to charge premium for the Guaranteed Loyalty Bonus? It would have been very difficult to market such a policy and Medios would clearly have known this.

Was Medios marketing their policies in 1998 by concealing from prospective policy holders their intention of charging for the loyalty bonus at later date if their business turned out not to be profitable enough? Were the marketing assurances misleading? Were they conducted in good faith? One could certainly get the impression that marketing was conducted in a manner deliberately designed to catch out the most vulnerable members of society as they grew older.

The Medios marketing materials made it quite clear that policy holders were protected from age related premium increases. It cannot be right that Aviva now pull away the protection of the Medios policy by retrospectively charging for the Guaranteed loyalty bonus at the point when the most vulnerable policy holders need it most.

If Medios is allowed to retrospectively change the terms of the policy surely the policyholder should be entitled to a full refund for all the premiums paid?

Aviva seem to claim that the business is not profitable. They claim that it is unfair for one set of policyholders to cross subsidize another. But this is a false choice. It is not right for either set of policyholders to accept these costs ( i.e. age related premium increases).Rather, if Aviva purchased the Medios business at a discounted price or failed to conduct proper due diligence or failed to supervise the underwriting under its watch then it is surely appropriate for Aviva’s shareholders to accept these costs. After all it was in their name that the badly conceived acquisition would have been carried out.

Why should any policyholder suffer as a result of Aviva’s failures, particularly if marketing was carried out in a misleading way?


Thank you in advance for investigating my complaint

Paulson

I used to think like you, Maytops.

All I knew was what I had been told.

Unfortunately, I had trusted Aviva to maintain the policy it sold me.
Consequently, I never realised Aviva had improperly granted itself powers to kill the policy’s value.
I never knew Aviva had cancelled life-time cover availability and caused an un-losable Guaranty to be lost.
Also, I never knew Aviva had taken-away the base-line of New Entrants, crucial to my Guaranty.
These are all problems yet to affect us that entirely invalidate our policies’ purpose.
They have been and remain hidden from us, due to Aviva misleading us.

Then I came across this Forum and realised Aviva’s misdeeds.

Consequently, I now know premium overcharging is a small part of the damage Aviva has inflicted upon us.
If FOS rules that overcharging has occurred then Aviva would happily refund such amounts, together with any related claims excess and interest. It would be happy to do so as it has no choice under the Financial Services and Markets Act 2000. And that would be the end of that, other than for some bad publicity for Aviva, as nothing else would have been lost.

However, all else is not equal as the crucial New Entrants’ base-line for the Guaranty has been removed as has Available Cover for Life as has a Non-Losable Guaranty. And it is those aspects that comprise well over 90% of the value of policyholders’ complaints, together with Aviva’s related misleading statements that hide those misdeeds.

I commend your reading the following most up to date Postings that identify key events and their impact upon policyholders:

4 January 2013 by Davidstone
This identifies all the mischief that Aviva got up to and identifies how Guaranties were improperly removed. Further details can be found in earlier Postings from that source and others.

22 November 2012 by Burtwood
This explains how Aviva plundered policyholders’ Guaranties and ensures that losses result whenever Age-Related costs need to be paid-out.

If you look at earlier Postings you will also see that Aviva’s stopping of New Entrants was the actual cause of the main part of 2012’s premium increase (repeated in 2013 with the addition of inflation). In other words, Aviva charged policyholders for its own contract breach. Rather like asking the Inland Revenue to take responsibility for paying your taxes! Again this is a very minor part of claim but I mention it due to your focus on that overcharge.

From all of this, one must appreciate that we will misdirect FOS if we limit our concern to overcharging (earlier Postings also make this same point). Unfortunately, that has occurred and helped Aviva mislead through incomplete information that discourages enquiry into the history of this product and into the contract entered into between Insurer and Insured; the result has already been an initial Adjudicator decision in Aviva’s favour. Any about-turn will only come from the incredible efforts of certain policyholders who have been able to uncover and, most importantly, effectively communicate Aviva’s disgraceful abrogation of its Guaranty liabilities.

Like I have, you might consider following the example set out by Guardog in his 24 December 2012 Posting. That could be through an initial submission or an amended one that takes on-board the information learnt from this Forum’s Postings.

Maytops

Thank you Paulson. Your comments are very helpful.
Obviously we all hope that the Ombudsman will reach the correct conclusion here but, unfortunately despite the strength of our arguments, and the honesty of our position, we can't be sure that they will see it our way.
They are certainly taking a long time to resolve this and you point out that Aviva also won the first round.
Nevertheless, in my view we should allow the Ombudsman whatever time they need to fully understand the case and to reach a sensible conclusion.
In the event, however, that the Ombudsman does not support us, or does not support us sufficiently, I am sure that it would be in our best interests to consider pursuing Aviva through the courts. On many of the points raised in this forum, I am confident that our legal case is strong. Has this legal option been discussed? Do we have a count of how many on this forum would be prepared to participate?
The first step, a legal opinion, to definitively establish the strength of our case should both improve our position substantially and encourage Aviva to see sense.