Aviva Medios Healthcare - are we being treated fairly?

Spruce

Thanks for that

PMW2012

Spruce wrote: »

I have just discovered this forum, but it reflects my own concerns about the Medios policy I have held since 1999. I was sold on the 'no age related price increases' and recently found that although I am 14 years older than at commencement, I could get a cheaper quote for a completely new policy now, with a much lower excess.
I would like to add my backing to the campaign. What is the simplest way to register my complaint with Aviva and FOS without having to repeat all the lengthy arguments presented on this forum?

I suggest that you register a complaint forthwith initially with AVIVA, which you must do prior to going to the FOS.
Cover your points of dissatisfaction (20% premium increase at the start of 2012/withdrawal of lifetime cover/and other points where you feel you have been prejudiced by looking at what other bloggers have mentioned).
Think VERY carefully about transferring to another product that "appears" cheaper as in the long run it may well not be.
Bear in mind that medical insurance is one of the only types of policy on which you will definitely claim at some time in the future and keep well clear of any policies offering you a "no claim discount" as you will pay very heavily after any claim.
Also talk to your broker(not online call centres who often only offer one product or provider and usually sell on price) and generally use google to find a "specialist medical insurance broker".
Any good medical broker will be aware of the Medios product problems which is causing uproar in the industry and can advise you on it.
Finally I would recommend that you do not cancel at this stage as the FOS decision, which will effect all policyholders, is likely to be forthcoming before you renew your policy at the end of this year and you would loose out on any benefit/compensation etc etc. awarded if you had gone elsewhere of course.

SeniorInsurer

Certain bloggers seem not to understand fully the relative pricing between long term policies, such as Medios, and short term, one year policies. For instance, those like Spruce consider that 14 years of paying above market rate should mean they’re now paying less. The following easy to understand explanation describes how the Medios product works and thus hopefully helps a better appreciation of the situation. Also, an Industry view is offered on the present debacle.

Long term v short term protection
The Medios policy offers long term protection unlike the short term, one year protection offerings of the likes of BUPA, AXA or even Aviva’s Healthier Solutions policy. The product originated from Holland, where Age-Related Protection is a Statutory obligation. Further details of its history have been set out by others in earlier Forum postings.

As also explained by many in this Forum, policyholders must hold and maintain their Medios policies for some 11 to 20 years in order to START to reap ANY reward from Age-Related Protection. Even then, only those policyholders that attain near average life expectancy are able to gain any net benefit. Consequently, this type of arrangement is only suitable for meeting long term needs and is inappropriate for any short term requirement. In keeping with that, and most importantly, Medios policies assess risk over policyholders’ lifetimes in contrast to annual assessments for short term, one year policies. The strictly annual focus of short term policies also causes a new policy to be issued each year, whilst that’s not the case for any Medios policy which continues over lifetime. Different risk approaches also substantively influence the periods over which policies are kept with the same insurer, with annual switching a particular characteristic of short term policies. Medios’ lifetime approach is coupled with a commitment to make cover available for life and for its Guaranty to be non-losable; neither one of those benefits being offered by short term, one year policies. New Entrants are a cornerstone of the Medios policy’s workings but are not relevant at all for short term policies due to their single year duration. Also noteworthy, is a different approach to Excesses; for Medios policies they are a considerable multiple of those for short term policies. And so the differences go on between these two completely different types of policy.

The reasons for Medios policies being initially priced some 40% more than rates for short term, one year policies are (a) the Medios commitment to available cover for life, (b) a single increase for Age-Related Costs, and (c) a non-losable Guaranty that protects against all other Age-Related Premium Increases some 11 to 20 years after policy inception. Consequently, risk adverse people with money to spend at the outset have been attracted to the Medios concept. Their downside risk was that the extra premiums paid, in the11 to 20 year period preceding Age-Related Increase Protection, might not be made-up or surpassed by savings from that protection because of earlier than expected demise (when compared to average).

The marketplace refers to Medios type policies as ‘level-premium’ or ‘cradle to grave’ policies’. Lifetime risk assessment is accomplished through a mathematical model that projects lifetime costs (including insurer’s charges) and divides them by relevant life expectancy years to compute a constant annual level premium, which only changes for inflation (and for Medios products, when the single Age-Related Cost Increase is made). The Medios special feature of a single Age-Related Cost Increase provides a one-off opportunity to readdress the risk exposure of its Guaranty. Methodology and tables have been explained and referred to in numerous published articles on this whole subject, including some by a former Medios Head of Marketing who held that position when most Medios policy sales were made.

Latest date to benefit from cheaper premiums
For the consumer, the Medios level-premium offering produces a half-way point in the policy cycle when a period of extra cost ends and changes to a following period of continuing saving. For example, a 40 year old with a life expectancy age of say 78 (at the time of the policy's inception in say around 2000) would reasonably expect extra costs to turn into savings in the year following the policy’s19 year anniversary (19 being half the expected 38 year policy term). Effectively, the extra premiums paid in the first half of the policy term would match premium savings in the second half, those savings coming from Age-Related Increase Protection. Rather like paying school fees upfront albeit without the certainty of any resulting benefit due to monies being wholly applied to the purchase of protection against Age-Related Premium Increases.

Complexities that might influence the crossover point between extra cost and savings
Hopefully, the simplicity of the above explanation facilitates a better understanding of the Medios policy, especially as many policyholders will be in a similar position to Spruce as most policies sales were in the 1996-2000 period. However, complexities do exist and some of them are discussed below:

Age Bands
Policy Age-Bands are a key policy feature and determine when protection starts. Effectively the start date for protection replaces the mid-cycle point when extra cost turns into savings, thus producing a premium that approaches the amount paid for standard short term, one year products. The 11 to 20 year period that precedes the gaining of that protection is purposely designed to fit reasonably neatly around the point in the mid-cycle, so the dates of each tend to be relatively close to one another.

Like other key features, Age-Bands form no part of Terms as they are wholly unqualified and unconditional. Without the Age Band key feature, the policy could not work and, therefore, by definition the Terms issued each year by Aviva cannot represent the entire contract between Insurer and Insured. The Bands cover ten year periods that always start with a number ending with a zero. For instance, a new policyholder aged say 41 would need to wait 19 years before benefiting from Age-Related Increase protection. Yet, a new policyholder aged 49 would only need to wait 11 years for that same protection. However, no winners or losers result as differences are equated through premium adjustments, and they are not overly significant once they are spread over the full lifetime policy cycle.

Demise other than at average age expectancy
Age-Related Costs will no longer be incurred for those suffering early demise. Unused extra premiums paid in the first half of the insurance cycle can be utilised to contribute to the benefits of other policyholders and will lessen their costs. However, extra costs will be incurred for those living beyond average life expectancy. Accordingly, one might conclude that one cancels the other, although there will be some overall financial benefit derived as savings precede extra costs and Age-Related Costs are generally static beyond average age expectancy.

Investment return
Paying Age-Related Costs upfront, in the first half of the policy cycle rather than the second half, creates significant financial benefit. Whilst the upfront payment aspect reduces overall costs and therefore reduces premiums, such costs are still viewed on a lifetime basis and therefore no change occurs to the crossover point when extra cost turns into savings.

Product pricing
The level at which initial product pricing is set will dictate when premiums get close to the pricing of short term, one year policies. One might reasonably expect that pricing would be similar within a couple of years after the point in the policy term is reached when extra cost turns into savings. Those extra one or two years are needed in order to provide for the extra cost of contingencies, necessary as costs need to be projected over the full lifetime policy cycle.

The level of charge for the single permitted Age-Related Increase will also dictate the closeness in pricing between the ’level-premium policy’ and a standard short term, one year product. Yet crucial market input was removed by Aviva when it breached its New Entrants’ obligation. Equally, that put the Medios business in jeopardy and knock-on effects will include an adverse impact upon costs and services and, inevitably, upon benefits. Obviously, removal of the mechanism for that Increase would appear to render it void.

Overcharging, of the sort perpetrated by Aviva in 2012 and 2013, can dramatically adversely change the crossover point, when extra cost turns into savings. That’s especially the case as once made that overcharging gets repeated each year over the full lifetime policy cycle.

Aviva’s transgressions
Both continuing and past policies have been impacted by Aviva’s transgressions and this is discussed below.

Continuing policies
As demonstrated above, most policyholders have reached or are close approaching the point in their policy cycles, when extra cost starts turning into savings. In effect they have paid in advance for all or most of their future Age-Related Premium Increases. Yet Aviva appears to have misappropriated their monies in the form of bumper profits declared for accounting periods up to 2010. Appreciation of the financial model described above, explains Aviva’s choice of timing. It’s akin to a well researched heist where robbers wait for all valuables to be in situ so as to strike with maximum effect. More despicable is that the funds taken, to create Aviva’s bumper profits, were for the future medical care of thousands of real people that trusted Aviva. As apparent, this wrongdoing seems to get uncomfortably close to common law criminality rather than being about an insurer over-stepping the mark. What is beyond dispute is that Aviva abjectly failed in its duty to make adequate provision for costs deriving from its Guaranty, as otherwise there would have been no need for 2012’s premium increase, nor for its continuation in 2013. When this is coupled with the ultra vires removal of lifetime cover and other improper unravelling of the Guaranty, a pungent stench of the unacceptable pervades. Aviva’s acts are certainly not representative of behaviour within our Industry.

Burtwood's 1st July post seems an admirable description of events.
Noteworthy is that not one word of dissent is raised by any policyholder; just appreciation.
They all seem to be well aware that Aviva’s transgressions are evidenced by Aviva’s own documentation.

Disappointing, and a constant unpalatable theme, is Aviva’s thorough abuse of its authority to change the policy. Each transgression throws up shortcomings in the preceding transgression. It’s an unacceptable practice that the Industry has sought to stamp out.

Excuses apparently proffered seem to be borne of the paralysis of being caught-out in possession of ill-gotten gains. Breaking a policy agreement, through removal of fundamental features, is clearly wrong under various aspects of law as well as non-compliant with Treating Customers Fairly regulations. Claiming no effect, for such wrongful action, defies all common sense. Aviva’s whim to self-abandon its contractual commitment to a single Age-Related Increase is ‘mind boggling’. Claimed ignorance of the need for adequate provisioning and its related impact upon capital requirement is ridiculous for any Industry participant, let alone one that operated the business as part of Norwich Union’s and CGU’s combined organisations prior to its internal transfer to their Norwich Union Healthcare subsidiary (subsequently renamed Aviva Health UK). As for Aviva’s unacceptable concealment and misrepresentation methods, not even Aviva’s immense creative resource seems capable of mustering any defence. Without the massive research effort of Burtwood and others, Aviva would never have been found out. Unsurprisingly, policyholders are in uproar and cannot be asked to trust Aviva in anything.

Discontinued policies
According to Maytops’ 6th June Post the Ombudsman has already communicated to Aviva that its action caused individual policyholders not to be in a position to make a fully informed decision about their cover. Assuming that stance is maintained, then victims that reacted by not maintaining their policies seem to have a strong claim against Aviva. Presumably, any misdirected policyholders that Aviva caused to transfer to its Healthier Solutions policy will feel equally aggrieved and claim. Cases will depend upon individual circumstances. Claimants will need to take account of the need for additional argument and associated uncertainties. Claims for illnesses that have become uninsurable with other insurers, where fault lies with Aviva, will also need to be evidenced.

Industry apology
Aviva’s misbehaviour hugely damages our Industry and cannot be condoned by any participant. The sooner this matter is dealt with the better, so everyone is fully aware of the penalties for engaging in such unacceptable behaviour and the Industry can then move on.

mwng

This just about says it all.

how_2

Based upon latest contacts with FOS, many of the initial complainants are concerned that Aviva will be left free to attack and destroy our Medios policy all over again. Worst still, the manner in which Aviva escalated its wrongdoings, ignoring both law and regulation, must mean future wrongdoings will become much more difficult to detect and prove. Aviva’s motivation will be a continuing need to offload massive Guaranty obligations, resulting from our premiums, because of inadequate provisions within its Statutory Accounts.

Our worry stems from FOS's seeming over-concentration on premium and excess overcharges (for which full recompense is expected to be awarded).Yet such matters represent somewhere around 5% of our claim value. More particularly, our main claim concern is our lost Guaranty, independently valued at some £70,000 plus for a married couple in their early sixties on Hospital Band B. Apparently, this over-concentration seems to be because overcharges were the first matter complained about, irrespective that it led to discovery of the far more important issue of our destroyed Guaranty.

An analogy is the tip of an iceberg visible above surface, as that accounts for only around a ninth of an iceberg’s total volume. The other 90% or so remains hidden below the surface. That is also the case with our Guaranty as Aviva’s skulduggery meant its string of attacks on our Guaranty remained hidden until uncovered by exhaustive investigation. Obviously that suits Aviva. The proposed timing of FOS’s announcement with Aviva's preparation and sending out of 2014's Premium Review Notices seems also to inadvertently help Aviva.

From what we have gleaned from latest conversations with FOS, there might be no legally binding restriction placed upon Aviva’s incorrectly taken authority to alter our Policy. Instead, only non-binding words of comfort might be required for the non-exercise of that stated authority. A similar overly light touch and non-binding Aviva assurance might only be required to remedy the change that improperly caused the product's lifetime availability to be limited to "where the policy is still offered by us". Also no controls might be placed upon Aviva with respect to premiums, policy flexibility, and benefits. That’s despite the negative pressures already affecting premiums, costs and benefits from Aviva’s non-provisioning of Guaranty benefits already paid for by policyholders. Also that’s despite the ugly and non-viable economics created by Aviva when stopping New Entrants and otherwise destroying our Guaranty. Together all those factors create horrific pressures for future premiums and benefits and certain mayhem for policyholders if Aviva remains free to exploit the results of its wrongdoings. Combined, those factors can only be overwhelming motivation for Aviva to continue to act unfairly towards policyholders. Those policyholders with the capacity to exit will do so because they know their policy will lose all value, leaving over-expensive claimants experiencing a further vicious and nastier cycle of penalties, relative to both premiums and benefits.

Worst still, this possible scenario has not been helped by FOS's continued dialogue with Aviva and its disinterest in extending that involvement to policyholders.

Options to counteract this injustice are available. For instance policyholders can make overtures to FOS to highlight their main Guaranty concerns. Ultimately, Aviva's natural desire to offload Guaranty liabilities (paid for by policyholders) will ensure it returns to its evil ways and becomes an embarrassment to FOS. We have learnt that from our bitter experience of Aviva’s war of attrition, ever since Aviva Holdings moved the management of Medios policies to Aviva Insurance, with Aviva Health acting on its behalf. We have been misled, lied to, and subjected to repeated misrepresentation when premiums have been collected. Also unfairly taken and other premiums have been wrongfully applied through an absence of proper provisioning. Policy fundamentals have been wrongfully removed to destroy our Guaranty. Aviva even had the gall to overtly and directly contravene that Guaranty with wrongful premium increases. The entire economics underlying our policy have been irreparably skewed so they can only produce a disastrous outcome. Unsurprisingly we have been and remain unable to make informed decisions.

Interestingly some of us share the misfortune of having been Equitable Life victims; a case with many similarities as it concerned a Guaranty, misrepresentations, lies and unfairness. One of our number tells us he joined a successful legal action that secured a settlement. Yet another tells us he relied upon FOS and lost out as a result. Apparently that was because FOS did not recognise the reality that losses increased as time went by but insisted that compensation was determined at the earliest point of complaint. The result was a zero compensation award for our fellow complainant. However, Government compensation for regulatory failure concluded our fellow complainant had suffered an aggregate loss of some £42,000. That meant he lost out by almost £33,000 because of FOS, as the Government only paid 22.4% of claims due to austerity. In other words, some of us have been here before and will not be content to be cast adrift at Aviva’s mercy or rather its self-interest and determination to do whatever it likes.

If sufficient numbers of other policyholders endorse this Posting with their thanks, one of the initial complainants will submit it to FOS on everyone’s behalf.

5:08pm, Tuesday, 22 October 2013
Thanks to all policyholders for affirming the urgent need to make their original Policy fundamentals sacrosanct again and for precise and reliable regimentation of future premiums. Unless their Guaranty is made whole and legally unchangeable, policy fundamentals can never again be relied upon. Also, only independently verifiable inflation can be allowed to impact upon future premiums, as Aviva’s wrongdoings ensure an irretrievable and downward slide to economic mayhem, which must pre-empt any reasonable link between future costs and future premiums.

If it’s impossible to reconstruct a legally binding lifetime Guaranty, that also protects against Aviva’s self-created economic mayhem, then full and immediate compensation needs to be provided for our lost lifetime Guaranty - together with full compensation for lost protection from risks uninsurable at standard rate with other insurers, where relevant illnesses became known after any Aviva policy misrepresentation or change of policy fundamentals (including the Guaranty, its availability and the authority to alter our policy) not properly disclosed in accordance with Regulatory Rules.

Your unanimous concerns will be submitted today to FOS.

standon

Like many others expressing Thanks on this site, I am a newcomer that has recently learnt about Aviva's dirty tricks to destroy our policies. For me, the news came from someone else’s dinner party comment that shocked but was immediately recognisable. Probably like many others I shy away from participating as I have never previously participated in any internet forum. Yet that's not going to stop me as I must do as well as say something about Aviva stealing our Guaranty.

Information on this site shows all information has been available for some considerable time, without good reason for delay in necessary judgements.
However, I then read Aviva has been consulted at every step of the way by the Authorities who, in contrast, seem to have shunned policyholders from their considerations.
This seems both unfair and wrong as it rewards and prefers the culprit over the victims.
Doubtless this aspect will be picked over by many, once decisions are forced into the public arena as there is no way it can inspire public confidence.

It's unsurprising there are concerns about whether decisions will be legally binding on the perpetrator. That’s especially the case considering the persistency and uninterrupted nature of Aviva’s misbehaviour, termed by one commentator as a pungent stench of the unacceptable that’s close to common law criminality.

Policyholders’ concerns are primarily focussed upon wrongly taken authorities, the removal of the policy’s lifetime availability, and the resulting mayhem inflicted upon the Guaranty and whether anything is salvageable from this awful mess.

Not retracting wrongly taken authorities, upon a promise not to use them, belies why those authorities were taken in the first place. That also goes for Aviva’s failure to declare those wrongly taken authority changes, as well as for its failure to explain their implications. Effectively those Aviva wrongdoings were “coaches and horses” sent ripping through the Regulator’s Rulebook. One can only conclude such deceit was intended to conceal contract breaches and unfairness then being perpetrated. Worse, this was not a onetime event as demonstrated by a later and further wrongful authority change in 2013. This later abuse not only demonstrated the inadequacy of previous authorities used for crucial changes (eg the removal of the policy’s lifetime availability), but it destroyed the policy from within by wrongly removing crucial flexibility. No reasonable judgement could fail to reinstate the original Aviva authority that limits policy changes to Standard Terms as well as reverse wrongful changes.

Leaving policy availability for Aviva to decide instead of restoring lifetime availability also makes no sense against Aviva’s following efforts to destroy our policy:

1.New Entrants were removed and that breach was concealed through repeated misrepresentation. A written confession was eventually forced out of Aviva that New Entrants had represented the policy’s Base Line, thus confirming that New Entrants had been a crucial policy cornerstone. Certainly New Entrants had been a key part of the Guaranty and, therefore, they must have been central to the thinking of all policyholders when they committed to Medios policies. Also, Aviva’s repeated misrepresentations on the continuing relevance of New Entrants must be considered against the care Aviva used in its choice of words when it delicately and almost unnoticeably tampered with 2005’s Terms to stop the policy's lifetime availability (yet another 'coach and horses' sent ripping through its Regulator’s Rulebook).
2.Aviva sought to stop the policy for 2012 and approached various brokers to gain support for that wrongful act. When rebuffed, Aviva sought to mislead policyholders to give up their Guarantees through scaring them and hounding them with improper premium increases and, at the same time, offering short term inducements to transfer to its Healthier Solutions policy. Those Aviva efforts glibly ignored the fact that premiums for the Healthier Solutions policy were highly geared to claims, something Medios policyholders already sought protection against relative to old age. One must presume any reasonably competent investigator would have confirmed all this and their report on this matter will be interesting.
3.Aviva’s strategy timing could only have optimised its benefits as 2012 was a key date for maximising premium intakes and minimising future claims from past premiums. Therefore, there’s no doubt that Aviva's motivation was huge and apparently irresistible.
4.The policy was sought to be destroyed from within through 2013’s removal of crucial flexibility.

The key driver to all these wrongdoings was Aviva’s wrongful non-provisioning for future claims deriving from past premiums. Instead Aviva used extra charged premiums to bolster its profits, rather than create necessary provisions for future claims. Yet this future claims’ overhang continues and ensures pressure remains on Aviva to continue to look for ways to jettison the liabilities it failed to provide for. Also, we all know Aviva stops at nothing to achieve its purpose as evidenced by its lies about FOS’s position to a Government Minister in order to pervert its Regulator's investigations. Worse, the Official, Aviva used to perpetrate that act, also presented Aviva’s case to FOS. Nor were policyholders immune from its deceit as demonstrated by the various 'coaches and horses' that Aviva sent ripping through its Regulator’s Rulebook, its wrongful removal of policy fundamentals, its previously mentioned misrepresentations, its ever changing reasons for wrongful premium increases, its misleading efforts to cause policyholders to give up their Guaranties, and its outright refusal to respond to policyholders’ questions about their Guaranties. For Aviva, Treating Customers Fairly, other Regulatory Principles and Rules, and observance of contractual obligations are all entirely alien concepts it persistently refuses to want to know about; instead, deceit is its constant wedded bedfellow in its blind pursuit of self-interest. Against this background, only a highly prescriptive judgement against Aviva can be reasonable.

That necessary prescriptive judgement must look to regulate both future premiums and benefits, as obviously doing one without the other is equivalent to doing nothing at all - analogous to locking the front door but deliberately leaving the back door wide open. Clearly the financial mayhem resulting from Aviva’s wrongdoings renders impossible any relationship between future premium revenues and costs. What remains can only be a poisoned chalice for policyholders. Claims relating to past premiums will create increasing mega financial hits without abatement from required adequate provisioning, which we know not to have occurred as evidenced by the debacle surrounding Aviva’s wrongful existing premium increases. Without protection, all reasonable policyholders capable of walking away would do so. That would only leave those incapable of escaping, paralysed because of their illness records. Consequently, remaining premium volumes must inevitably become heavily negatively skewed and would be guaranteed to fall below the minimum necessary for any viable business operation. All these actions would result, as the ensuing financial mayhem would be irreversible. Consequently, a terrible injustice would occur if independently verifiable prescriptive measures for premiums and benefits do not form the basis of any judgement.

An obvious danger is for there to be only one lead case, especially where policyholders are otherwise shunned by the Authorities. That places an unfair and unrealistic burden on a single person who might, at best, seek to apply the knowledge of others; however that must be without their crucial experience. This is a very real concern due to the oppressor being a large multi-national that has advisers of every kind at its beck and call, besides exercising considerable influence in high places.

Whilst I and some 300 plus other policyholders agree with all how's immediately preceding points, it must be reasonable for all complainants to be given the option of full and immediate restitution for the damage suffered - being primarily the loss of their Guaranty and above standard charges for alternative illness cover where such illness was first suffered following a contract or Regulatory breach not fully or properly disclosed in a timely manner by Aviva - especially in any absence of any solid, immovable, prescriptive structure to govern and regulate all the above mentioned matters.

PMW2012

I understand from my broker that 2014 renewal information terms have now been provided to him.

They are showing an 8% premium increase on Medios renewals and I understand that this is in line with the rate charged by Aviva for non Medios policies and also in line with medical inflation which is being charged this year across the market.

The renewal notice does however come with the statement that the rise is due to "rising cost of healthcare and claims experience of the Medios policies." One can take this positively in that the actions they took in 2012 have completely solved the problem they had however in view of the "missing reserves" and likelihood of further increases in premiums resulting from Aviva closing the portfolio to new entrants, can we be satisfied that no further actions as taken by them in 2012 will arise in the future?

There is also an attachment regarding "changes in terms" however this seems to be a tidying up job although one can never be too certain of what may lie behind these documents, given the handling of the Medios product by Aviva since 2012 renewal.

CompAssr.

I just happened to look again at this web page and was staggered to read PMW2012’s 28th November comment.

PMW2012’s broker is indeed correct that Aviva presently intends to make an 8% medical inflation increase for 2014.

However, it’s nonsensical to expect such action will solve Aviva’s provisions problem.
Maybe, neither does PMW2012 as he ends his 3rd paragraph comment with a question mark!

Even if 2012’s increase was continued and repeated for some 20 years, with further similar annual medical inflation increases, only some 25% of Aviva’s provisions bill would be covered.

More importantly, PMW2012 omits to mention that 2012’s premium increase was an overcharge.
The same goes for its repetition (with inflation) in 2013 and in 2014.
Consequently, all those monies require to be repaid by Aviva to policyholders with interest.
Only Aviva is responsible for future claims relating to past premiums and not policyholders.
Instead of Aviva properly setting aside provisions to cover those future claims, policyholders’ monies were misapplied to bolster its profits – policyholders know that for certain as claims’ shortfalls first surfaced in 2012 (ie the start and by no means the end).

I make no comment upon 2014’s changes in terms as Aviva’s past actions ensure they come with an enormous Health Warning and doubtless the original complainants, responsible for uncovering Aviva’s wrongdoings, will go through them with a fine tooth-comb.

Policyholders would do well to focus on Aviva’s bogus authorities, the loss of their Lifetime Guaranty, and the financial carnage wrought by Aviva on future costs that renders them useless for any future premium setting.
They need to heed the comments made by how (on 18th October) and standon (on 24th November), as they fairly represent the main issues affecting policyholders - overpayments are minor in comparison and something the Ombudsman has already indicated action on.

burtwood

Policyholders will have received or are about to receive their premium Notices for 2014.

In an explanatory foreword Aviva identifies important headline information.
Aviva finally admits New Entrants are no longer a key cornerstone of its Guaranty, after 4 years of misrepresenting them to be so.
However, misleading policyholders to pay premiums for something that never existed over 4 years of misrepresentation gets no mention.

Aviva now represents that “we continued to calculate a new entrant rate for the purposes of applying the guaranteed loyalty bonus”.
Use of the word “continued” means this practice was applied to previous years.
Yet reference to “notional” calculation comes naked of all information from some unknown secret source - apparently magicked from something neither heard of nor seen before; obviously some dark elusive wizardry.
Yet, we know the calculations must be bereft of crucial base information as Aviva told the Ombudsman it “did not have the original pricing basis or reports for the business .....”.
Also we know that all claims experience used in those calculations will be overstated as claims were not but should have been abated by provisions created in preceding years, as learnt from 2012’s premium debacle.
What we are left not knowing is how within a regulated marketplace an assurer can charge premiums for something it knew not to exist and then conceal that through repeated misrepresentation.

Simply put, Aviva charges for the non-existent and then also requires the world to trust unseen calculations that:

- exclude all crucial original pricing and report information,

- are inflated by inadequately provided claims from past premium years, due to Aviva bolstering its profits rather than making necessary provisions (the effect on policyholders is to cause then to pay twice for the same claims) ,

- are absent of all detail, explanation or reasonableness support, and

- cannot be tried out or proven in the marketplace due to Aviva’s breach of its New Entrants’ obligation.

As to whether Aviva’s actions are reliable, we know Aviva repeatedly misrepresented and concealed the breach of its New Entrant’s obligation.
Equally, it’s clear nothing impedes Aviva’s pursuit of self-interest whether that be through ignoring, misrepresenting, misleading or deceiving Regulator, FOS, Government Minister, policyholders, regulations, contract or law.
We also know that Aviva can act in the most delicate manner possible to weave its tapestry of deceit and to maximise its self-interest.

Besides Aviva’s unacceptably belated and forced mea culpa, we now know Aviva has been inflicting policyholders with these false increases for the past 4 years.
Consequently, 2012 was not the first time Aviva forced overcharging onto policyholders as that must go back to at least the start of 2010, the time policy sales were stopped.
Whether this made-up pricing (together with its potential for overcharging) stretches back to even earlier times depends upon when Aviva made its last policy sale, especially as the absence of crucial underlying pricing and record information automatically also raises that concern.

What’s definitely known is that the essential characteristics of the policy originally purchased were systematically removed with bogus and inadequate authorities over many years, right up to last year.
Also definitely known is that Aviva’s deception caused policyholders to continue to pay premiums without awareness of its misdeeds or misrepresentations.
Only irreversible financial mayhem and immovable distrust of Aviva remain.
Nothing can therefore be relied upon, whether that’s premium setting, claw-back of benefits by Aviva to abate past provisioning inadequacies, or the newly magicked, unseen, and entirely “notional” and unsupported New Entrants’ figures.

Against the above it’s reasonable to appreciate why some policyholders consider it insufficient for bogus authorities to be removed, for their rights to be resurrected and protected, for future premiums and benefits to be regimented and subjected to third-party verification, and for wrongful charges to be compensated.
They know New Entrants and the marketplace cannot be resurrected and that, when Aviva killed them, the policy’s death-knell rang.
Nor is there any escape from the financial mayhem of continuing mega claim hits due to Aviva’s abject failure to make proper and adequate provisions.
Equally, Aviva’s repeated misrepresentations, deceptions and bogus authorities destroyed the entirety of the relationship and trust essential between contracting parties.
Unsurprisingly, such policyholders’ basic instinct and priority is to run as fast and as far away as possible from this utter disaster with immediate restitution for (a) the loss of their Guaranty and (b) above standard charges for alternative illness cover where such illness was first suffered following a contract or Regulatory breach not fully or properly disclosed in a timely manner by Aviva.

PS
Other changes of lesser importance are made in 2014’s premium documentation.
For instance, Aviva removed from all its obligations the need to act reasonably.
One can only conclude that some are just unsuited to living compatibly with others.

mwng

I got this today from the FSA. It is the Ombudsman's decision on a related case. It looks pretty awful. Comments anyone?

"Final decision – ‘Mr D’ against Aviva Health UK Limited
complaint
Mr D’s complaint concerns the premium increase on his private medical insurance policy which is now provided by Aviva Health UK Limited (“Aviva”).
Mr D has also provided detailed submissions about the management of this product since it was originally sold during the 1990s. He has been in discussions with Aviva with regards to the future of this particular policy and is seeking a resolution for all its policyholders. However, we do not perform a regulatory role and, as Mr D has recognised, many of his wider submissions are better suited to the Financial Conduct Authority. I have considered only the individual circumstances of Mr D’s complaint.
background
Mr D took out a private medical insurance policy through another insurer (“Insurer A”) during 1997, and the policy has been renewed annually since this time. The policy provided benefits comparable to other policies available at the time but included a Guaranteed Loyalty Bonus (the guarantee), which was described as follows in the original policy terms:
Article 11 – Guaranteed Loyalty Bonus
For as long as the policy remains in force and the premiums applied to each individual insured adult is paid, each insured adult will be charged an increased premium for age once only. The increased premium will be the premium applicable to new entrants in the age band next above the age band applied at inception to the insured adult.
This meant that the policyholder would only ever have one age band increase after the inception of the policy. The policy was taken over by Aviva in 2000.
The original terms and conditions of Mr D’s policy also provided:
Article 8 – Adjustment clause
[Insurer A] is authorised to apply to current insurances any changes in conditions or premiums. [Insurer A] shall inform the policyholder in writing of any changes before the date of commencement of such changes. The policyholder has the right to cancel the insurance in writing by registered letter within 30 days after the date of commencement of the changes. Premium changes on the basis of the age of the insured shall not be considered changes as referred as above.
The policy document in place during 2011 stated:
3. Policy Duration and Premiums
a. This Policy shall be for one year and is continuable subject to the terms in force at the time of each Review Date where the product is still offered by us. On this basis you agree that we may at our option renew the Policy automatically on the terms in force at each Review Date, that we may continue to collect your premium at the appropriate rate and that we need not obtain your request to do so for each renewal. We will of course notify you of any changes to the premium or Policy terms prior to each Review Date and you may then notify us should you not wish to renew.
Mr D’s policy renewed on the first day of each year.
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In November 2011, Aviva wrote to Mr D to inform him the renewal premium for the following year would be significantly higher than previous years. In response to Mr D’s complaint, Aviva said there were three elements to the increase; including increases in Insurance Premium Tax and in medical inflation. The increases relating to these elements are not in dispute. The third element was described as being the cost to cover the guarantee, which Aviva explained had been substantially under-priced since the policies began. It said it was not looking to charge higher premiums for historical under-pricing, but to increase it to an appropriate level to continue providing the product with the guarantee.
Mr D made a number of submissions to Aviva, in an attempt to resolve the issue. Unable to come to a mutual resolution, Mr D referred his complaint here.
As part of his complaint to our service, Mr D requested Aviva should provide confirmation that premiums will only increase because of medical inflation in future – so that the policyholders have a lifetime guarantee. Additionally he requested that Aviva refund any overcharged premiums. Finally, Mr D required Aviva to maintain the original terms of the contract, as he considered the changes Aviva made were done without correctly informing policyholders, and could affect the future of the policy.
Having reviewed the original policy terms, our adjudicator was satisfied that Aviva was entitled to change the policy terms and that the contract had always allowed the insurer to make these changes. However, he concluded that the increase in premiums and the explanation Aviva gave for the increase was not reasonable. He recommended that Aviva maintain premium levels for 2012, 2013 and 2014 (outside increases that would ordinarily be applied for insurance premium tax and medical inflation). Neither Aviva nor Mr D agreed with the recommendation made. However, Aviva said its explanation for the premium increase should have been presented differently. It concedes that compensation is due for its inaccurate explanation of how the 2012 premium was calculated and is willing to offer £300.
I previously issued a provisional decision in this matter.
I took into account relevant law and regulations; regulators rules, guidance and standards, and codes of practice; and, where appropriate, what I consider to have been good industry practice at the time.
The FCA principles apply to all authorised firms, including Aviva. Of particular relevance to this complaint are the following principles:
■ Principle 6
“A firm must pay due regard to the interests of its customers and treat them fairly”
■ Principle 7
“A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading”
In addition, the more detailed FCA’s Insurance Conduct of Business rules apply. And so it is necessary to take these into account. Of particular relevance to this complaint is:
■ ICOBS 2.2.2R
“When a firm communicates information, including a financial promotion, to a customer or other policyholder, it must take reasonable steps to communicate it in a way that is clear, fair and not misleading”
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Having done so, my first consideration was whether Aviva was under any obligation to maintain the original policy terms and conditions.
I noted that Aviva had not attempted to withdraw the policy and I did not consider that the changes to the premium proposed could be deemed to be fundamental changes to the nature of the cover offered. I provisionally concluded that notwithstanding the “policy for life” marketing, the policy was in fact a regularly renewing annual policy and that although Mr D would have had a legitimate expectation that his policy would renew annually, I was not persuaded that he could reasonably have formed the view that renewal would always be on exactly the same terms. It follows that I was not persuaded that Aviva was obliged to maintain the original terms and conditions.
Mr D was also concerned by Aviva’s change of the Article 8 adjustment clause to include the words “where the policy is still offered by us”. He felt this was at odds with the way the policy was initially marketed as a “policy for life”. However, as Aviva had not attempted to withdraw the policy I did not consider this change to be deemed to have changed the fundamental nature of the policy.
My second consideration was whether Aviva communicated its decision reasonably and had otherwise acted in a manner that was fair and reasonable in all the circumstances.
Aviva had explained to Mr D, and to this service, that there were three elements to the increase in premium, the largest part of which was to pay for the guarantee. However Aviva subsequently explained that this was not in fact the case. It said that the explanation given was just an attempt to explain in a simplistic way how the premium increase had been calculated. It has shown that in fact premiums were calculated in accordance with standard practice and no part of the premium was allocated to cover the guarantee. It has advised that the (capped) 20% increase consisted of 1% insurance premium tax, 7% medical cost inflation and 12% to reflect claims experience.
Therefore, although Aviva said it calculated the premiums in the same way as it had in previous years – I appreciated Mr D’s grievance. He had been misled by Aviva for nearly two years. I understood too his concern that the increase in premiums was due in part to the fact that Aviva withdrew the product to new members in 2010. But I was satisfied Aviva’s decision to do this was a matter for its own commercial judgement, with which this service cannot reasonably interfere.
Nevertheless, I concluded that the increase in premium was a significant one, and higher than Mr D would have reasonably expected given previous years’ increases. Although the way Aviva manages and administers the policy is strictly outside my remit, I am able to consider whether it had treated its customer fairly.
I noted that, had Aviva explained why the policy was no longer sustainable at the current premium level and appropriately communicated this to Mr D, I would not have considered it to have acted unreasonably. However, as one of the main selling points of the policy was the guarantee, I provisionally concluded that Mr D was likely to have considered that his premiums would not increase substantially with age. As Aviva was advising that the reason for the premium increase was in part to cover the cost of the guarantee, I thought it understandable why Mr D would have felt he was paying an age-related increase in a roundabout way. Although Aviva has since demonstrated this was not the case, its explanation came late in the day, which I considered to have been unfair and misleading.
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Accordingly, I provisionally concluded that the way the decision to increase premiums was communicated would have been worrying and confusing and would have caused Mr D anxiety about the future. For this reason I was persuaded that compensation was merited. I was pleased to note that Aviva agreed and was willing to make an offer in compensation of £300 in respect of the 2012 increase about which Mr D initially complained. I noted that it is difficult to accurately compensate for worry and inconvenience, but it seemed to me that a fairer way to attempt to do so would be to maintain premium levels for 2012 and 2013 (outside increases that would ordinarily be applied for insurance premium tax and medical inflation). This covered the period of the incorrect information. I understood that for Mr D this would amount to a sum of £552.00 (which included interest at 8% from 1 January 2012 until 31 August 2013).
responses to my provisional decision
In response to my provisional decision Aviva broadly accepted my findings and has confirmed it is willing to pay compensation of £552 in order to resolve this dispute. However, whilst Aviva accepted that compensation was due to Mr D, it did not consider this compensation should be linked to Mr D’s premium, as it felt this suggested it had made a prohibited premium increase. Additionally it was concerned that comments in my provisional decision could be understood to suggest that Aviva was obliged to maintain either this or comparable cover in the future. It felt that this in effect prejudged any future complaint that may be brought concerning this issue.
Mr D also responded to my provisional decision. He broadly accepted my findings, but he remained concerned about the future of the policy. He felt it unlikely he would be able to obtain comparable cover elsewhere if the policy were to be withdrawn. He made the point that the policyholders were an ageing portfolio and many would find themselves in a similar position to him.
my findings
I have reconsidered all the available evidence and arguments, along with the further submissions from both parties, in order to decide what is fair and reasonable in the circumstances of this complaint. Having done so, I see no reason to substantially depart from my provisional decision.
I would like to clarify that I consider compensation should be paid for the distress and inconvenience caused by Aviva’s misleading explanation for the premium increase; but I do consider that the increase in premium was permissible.
However, I have explained why I considered compensation should be an amount equivalent to the amount Aviva charged for premiums outside what Mr D would have been reasonably expecting at his 2012 and 2013 renewal. This is because at the time Aviva made these increases Mr D would not have reasonably expected this level of increase and was not given correct information about the reason behind it. This left Mr D unable to make any decision about his future healthcare provisions. I would not usually require interest to be paid on a compensatory payment, but Aviva provided the figure and has agreed to pay the sum to Mr D.
Aviva issued its complaint response to Mr D on 20 January 2012 and within this letter it first explained that part of the premium increase was to cover the cost of the guarantee. Mr D’s policy had renewed effective from 1 January 2012. Because of this, Aviva considers that it only caused Mr D uncertainly about the following year’s premium increase, as it had not misled him up until it issued its complaint response after the renewal. However I am
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persuaded that the significant and unexpected premium increase applied at the 2012 renewal, with no explanation to Mr D, was sufficient to cause him a level of uncertainty and distress. I therefore consider it fair for Aviva to maintain the premiums for 2012 and 2013, outside of the increases Mr D was reasonably expecting.
In my provisional decision I agreed with Mr D’s arguments that where a consumer had been induced to purchase a policy because of overarching promises, it would be unfair if those promises were at a later stage broken. In this case, the policy in question was marketed as a “policy for life”. I therefore stated that I would have been concerned if the policy was withdrawn without Aviva offering a comparable alternative.
Aviva argues that this comment is not relevant to Mr D’s particular complaint, as it has not attempted to withdraw the policy. I acknowledge this and should make clear that I cannot require Aviva to continue to offer this policy or tell it what the premium should be in future, as this is a matter for its commercial judgement.
I should say that I have not disregarded Mr D’s concerns about the future of the policy. However, as indicated above, it is outside of my remit to further determine what steps Aviva should take with regard to the policy, if any, in the future.
Aviva indicated in its correspondence to our service the policy has been underfunded for a number of years, which led to the significant increases at the 2012 renewal. I did find it surprising that Aviva therefore only made premium increases in 2012, seemingly several years after it was aware of the issues. Mr D is of the view that the policy has been mismanaged for a number of years and that this has led to unfair treatment of the policyholders. Regardless of this, my decision is based on whether Mr D has been fairly treated in his individual circumstances, and aspects relating to the management of the policy are not within my remit to determine.
my final decision
For the reasons set out above, I require Aviva to pay Mr D £552 compensation."