Aviva Medios Healthcare - are we being treated fairly?

Lawton

This Post seeks to report to policyholders the direction of their case.

FSA
Aviva’s strategy of presenting selective aspects of the Medios policy was successful in the first half of this year. That reflected policyholders’ inability to access the FSA’s thinking and then communicate key policy terms and events omitted by Aviva. Not surprisingly, the FSA then concluded that no major infringement had been perpetrated by Aviva. Consequently, issues requiring action were left with the FSA team responsible for Aviva’s day to day surveillance. That meant no referrals were made to the Enforcement Division nor to the part of the Division dealing with Unfair Terms.

The uncovering of Aviva’s apparent efforts to manipulate the FSA seems to have brought a complete about-turn as illustrated by the following FSA quote:
“we are currently engaging with the firm from a number of areas within the FSA”.

Whilst the future looks bleak for Aviva, nothing can compensate for the trauma policyholders have been put through over the entire past year. Not only did Age-Related Increase protection seemingly disappear but that seemed also to be on the horizon for policyholders’ future health cover, crucial for the wellbeing of their families.

FOS
Only the Ombudsman's determination has relevance to policyholders. No party was ever going to rely upon the views of a junior adjudicator that then had 6 month’s work experience at FOS, preceded by only 13 months of paid employment in unrelated areas.

Her naivety and lack of experience caused her to be misled by Aviva. She even failed to read the first policyholder’s complaint ie after sending her 'decision', she admitted she had not even been aware that complainant had a Guaranty. Nor did she have any interest in how the product was sold, nor in Aviva’s ultra vires grant to itself of additional powers. She then went beyond her remit and endorsed Aviva's attempt to cause policyholders to transfer to Healthier Solutions; astonishing behaviour for any FOS employee.

Unfortunately, inexperience is not uncommon amongst FOS’s junior adjudicators. Consequently, this particular one unwittingly followed the Aviva path when she solely focussed upon whether Aviva was generally entitled to make premium increases. That did not deal with whether 2012’s premium increase breached Guaranty terms, nor with the consequences of Aviva’s breach and misrepresentations on New Entrants, and most importantly it entirely ignored policyholders’ main complaint concerning their Guaranty loss.

Even on the lesser complaint point concerning premium increase, a senior FSA Official took the opposite view with the following observation on Guaranty wording:
“We consider that the clause explains clearly how often the premiums will increase and how the premium increase will be calculated and then applied to policyholders. The clause is written in plain and intelligible language as required by Regulations 7”

Again the future looks bleak for Aviva on all counts, more especially as the overall amounts involved appear to be in the hundreds of millions.

How’s 22.10.12 Post
Yes, How's observation is correct.

The causal issue is a previously unpublished act by Aviva, perhaps motivated by desperation when it realised its strategy on presenting selective policy information was unravelling.

A later Post will be made, when appropriate, under the heading “Aviva caught in flagrante”.

Lawton

Aviva has self-immolated.
It misrepresented FOS’s position in a desperate act to stop my MP from assisting policyholders.
Both Aviva’s ultimate holding company and its health subsidiary seem to have been involved.

Obviously, Aviva holds FOS in low esteem as it had no fear about misrepresenting it.
Aviva also demonstrated contempt for the FSA’s investigation as it knew my MP was contributing to that process.

Influencing my MP, a Government Minister, was surely not worth upsetting both FOS and the FSA.
However, maintaining Aviva’s ‘disinformation’ on Medios Policies appears a more suited objective.
Arrogance and ego all seem to be essential parts of such deception.

As often occurs, the cover-up RIVALS the wrongdoing when the stakes are high.

AVIVA’s anxiety to jettison huge guaranty liabilities appears good reason for its mendacity.
Perhaps, internal pressures to bury old problems are also bearing down upon Aviva as otherwise any hoped for performance turn-around could be derailed.

The end result is that Aviva has been caught in flagrante.

PMW2012

Earlier this year (february) I posted a number of messages on this site.
I had lodged my own complaint with AVIVA and received a response from their Financial Director which invited me to contact him if not happy with his response.
Having been involved with this product since it's launch in 1996 I know its detail intimately as I also obtained a lot of national PR support for this product in my role at that time as a broker.
As a result of our conversation it became clear very quickly that Aviva did not know how to handle the situation they had got themselves into so I offered to help, an offer which was accepted in view of my knowledge of the product as a broker, insurer, policyholder and claimant. The assistance was in respect of "being an unpaid customer representative"!
During the ensuing months they were trying to work out what to do and I must say that they seemed to be getting it right with the main issues which included

• They decided that as their software was way out of date "and it was their intention to maintain this product as our customers value it". In fact they hadn't spent anything on the software for many years and whilst they saw this as costing them money it was perhaps a reluctance of keeping software up to date that resulted in this expenditure being incurred now.
• They have made the decision now (and in their renewal policy wording it is clear) to close this book of business and place it into run off. Inintially would you believe they were proposing to cease cover on the death of the policyholder until I pointed out to them it might be difficult to explain to their partner at a time of beravement that they were no longer covered or could be covered at a vast increase in premium.....in the end they realised as a result of which all policuyholders and their dependants are now covered. There would appear to be a shortage of policy wording expertise available.
• With regards to premium charged at last renewal their arguement was that the account was running at a loss and this had corrected it. When I asked about the sinking fund they admitted that "there wasn't one". One can only suspect that in the transfer of this product (Originally a Delta Lloyd product, to Commercial Union and then merged with Aviva) that due diligence did not pick this up or that accountants who did not understand sinking funds went off and spent it. I can see a professional negligence claim being submitted by Aviva in this respect arising in the future perhaps? (In this respect may I thank various members of this blog for explaining the issues and points of law which have been most helpful to me, aviva and I am sure the FSA and FOS in their deliberations.
• Aviva in respect of overcharging have, in their wisdom, decided to "let the Ombudsman rule" on this (see my later note in this respect.)

Only in the last week or two have renewals been coming out to brokers and policyholders. Unfortunately and despite my guidance to their letters and documentation a number of errors have arisen as follows,

1. A letter to brokers advising them of the changes was prepared to be sent in advance of the letter to policyholders so that brokers would be prepared to answer policyholders questions. Aviva failed to send this out at all and hence found themselves deluged with broker complaints.
2. I recommended that the letter to policyholders explained the cover changes/pricing and resolution of the overcharging in 2012 however all it covered was the admin changes to the IT system!
3. I Suggested that a word by word cover changes leaflet was to be sent with renewals explaining the changes in detail as required by FSA however the detail provided does not, to me seem to satisfy this requirement.

Please see separate blog I am sending dealing with renewal terms and documentation to follow shortly.

PMW2012

Please refer to my earlier blog regarding Aviva's actions in 2012 before reading this.
As some of you may now be aware Aviva have started issuing renewal terms to intermediaries in the past week or so.
Having received mine I detail below what I regard as the salient points to be considered.
Please note that my cover is MEDIOS OPTIONAL cover so there may be some minor differences if you are on other medios products.

PREMIUM

Renewals have been issued with an 8% increase in premium. This is Aviva's own rate of medical inflation and it should be noted that this varies between insurers. What is most interesting is that my broker advises me that the 8% rate has been applied to all of the Aviva renewals so the Medios clients have not been prejudiced as at the beginning of 2012 when their rates were increased by 20% made up of 7% medical inflation/1% IPT increase and 12% as advised to me by Aviva being "going part of the way towards covering the cost of the GLB on the Medios product which we believe is substantially underpriced". Please see my comments in my earlier blog re the loss of the sinking fund by Aviva.

GLB AND WHO IS COVERED

As previously mentioned the GLB has been maintained, and hence the only increases they can therefore apply relate to medical inflation. The changes made to the wording protects all existing insured and not just the policyholder but will not allow new lives to be added. Bearing in mind that this is a closed book now in their eyes this is reasonable and of course gives a limited lifespan now to this product probably of about 30 years I believe.

POLICYWORDING

The "guide to changes" is, in my mind extremely skimpy in the information it provides and even with my knowledge of the product was difficult to follow. Usually when such major changes in wording take place a word by word document is issued by insurers (I am aware of this having been involved in Compliance for the past 10 years).
I have sat down myself and done a word by word analysis for my own use.
I can tell you that in most areas it has bought the cover up to date however here are a few points for you to look at closely.

1. Change from Provincial to Key hospital list. Difficult to track off the Aviva website but a sensible use of the web to enable them to add/change hospitals at short notice
2. Greater flexibility to use out of areas hospitals
3. Diagnostic centres-no details given but have checked with the Medios claimsline and your local private hospital may well still be your diagnostics centre
4. Much to my amazement the have removed the £500 family excess entirely (Their original plan was to reduce the total excess to a proportionate personal excess per person ). It would appear that their actuaries must have calculated that this saving is less costly for them to handle administratively perhaps however usually removal of an excess of this nature would increase premiums by about 5%
5. No mention of last years 20% increase. As already mentioned they are leaving this to the Ombudsman to run on.

I hope this information is of use to policyholders.
Please see further blog to follow regarding actions with the Ombudsman and FSA I have been taking.

PMW2012

Please can I suggest you read my recent blogs part 1 & 2 before proceeding with this one.

As you are aware I have been assisting Aviva with their problem here and, as good progress was being made, I did not initially file a complaint with the Ombudsman.
During the summer progress seemed to grind to a halt about the time of the demise of Andy Moss and so, in the full knowledge of Aviva, I advised them that in order to protect my position that I would be registering a complaint with the Ombudsman. I also copied in all my correspondence to the FSA.
Having followed the various blogs on this site I was aware of the slow pace of development and also of the actions being taken by "Lawton's MP" which proved very helpful.
In October in shear frustration with the inaction I wrote to the Chairman of Aviva and Healthcare Director. My purpose being to get long term clarification on premiums and continuity of cover, two of the three issues (the third being the increase charged in 2012) that every policy holder needs to know.
I have still not had a satisfactory reply on my two points and get the impression that they are waiting for the FOS and FSA responses.
More recently I have also spoken to the FOS and understand that all cases(which I am led to believe amount to several 100 cases) have been passed to their "specialist team".
In view of my knowledge and industry experience I have offered to assist them......an offer they have indicated they may well take up.
To get this in proportion the numbers involved are around 2000 policies and say 4000 insured persons. This represents less than 1% of the entire aviva Healthcare portfolio so any pricing errors will not have an unduely negative effect on their entire portfolio as I have yet to meet an underwriter or Actuary who has got anything 99% correct!
We therefore have up to 10% of policyholders already complaining to the FOS.

WHAT CAN YOU DO TO HELP

To gain maximum impact here we need to encourage every policyholder to lodge a complaint with insurers and then with the ombudsman so if you have not done so already please do so forthwith.
Please also draw this information to the attention of your broker and suggest that he alerts all of his clients of the disquite about this product.

SUGGESTED APPROACH TO THE OMBUDSMAN AND COMPANY

We need to get clarification and ruling on the following points;

1. That insurers will revert to the original wording of the contract (changed without proper advice to policyholders by Aviva between 2000 and 2012) by removal of the wording brought in by Aviva "where the product is still offered by us" Condition 3 a
2. Confirmation that the pricing will only increase by medical inflation througout the duration of the contract. I know that "pricing per se" is an issue not normally considered by the FOS and FSA however in this case it is a fundamental term of the product and affordability of cover. We are fortunate here that the FOS gave a ruling earlier this year on withdrawl of cover for pets by certain insurers and unless the above changes are agreed one could well consider that Aviva are treating humans worse than animals!! Would make a good headline in the newspapers perhaps?
3. Review of overcharging at renewal at the beginning of 2012 which of course also effects the base line cost of subsequent renewals

Hope that this final part of my postings will fill you in on developments and progress made.
One would like to think that the actions taken by Aviva of bringing the product onto their standard IT system, increase at the same rate of medical inflation as their other policyholders and certain improvements to policycover are the start of a new beginning however acceptance of the points above would enable us all to put this matter to rest.

heathcote_2

I have heard from the adjudicator by telephone to say that my case has reached the point that it is now ready to be investigated.

I got the impression that all complaints are now being dealt with by one central team and are being looked at not only on the individual interpretation of the individuals complaint but also now on whether taking all complaint together that the FOS thinks that Aviva have acted unfairly and should be reported to the FSA.

They are monitoring forums to see what discussion is taking place in formulating a more general view of what Aviva has done in this specific case.

I have never been able to get Aviva to confirm how many people have a Medios policy so was interested in what PMW2012 reported on about 2000 policy holders. PMW2012 are you guessing or if not what is your information based on?

I was told by my adjudicator that the team is only dealing with " 10 to 15 " complaints received by them. Not sure if this includes current cases only or previously adjudicated cases. This is a very small proportion of affected policyholders.

My thoughts still are that Aviva have calculated at outset the ramifications of their actions and weighed up the likely financial impact of various scenarios of outcomes. If they only have to address the concerns of 10 t0 15 claimants then this is not a big problem for them. If however the FOS feels that they have treated clients unfairly then they may have to look at all their policyholders. This includes those still policyholders and those who have ceased to be policyholders who ceased cover on the basis of ignorance of the facts. This was the case with Halifax and the pet insurance scandal recently.

heathcote_2

When I took out my Medios policy I was also considering a similar 'no age related increase type policy' with Exeter Friendly. Does anyone have any knowledge of whether Exeter have been able to maintain this policy in its original format and with reasonable inflationary increases?

PMW2012

This figure, whilst not confirmed by Aviva should be pretty accurate from sources in the industry who have ben advised by Aviva that their portfolio represents XXX% of the total number of policies.
Ref Ombudsman numbers, the information you have been given is at variance from that I have been advised about but am aware that the FOS are bunding all cases together to be passed to their specialist division. Needless to say the FOS have their work cut out at present dealing with the enormous volumes of PPI cases being passed to them.

heathcote wrote: »

I have heard from the adjudicator by telephone to say that my case has reached the point that it is now ready to be investigated.

I got the impression that all complaints are now being dealt with by one central team and are being looked at not only on the individual interpretation of the individuals complaint but also now on whether taking all complaint together that the FOS thinks that Aviva have acted unfairly and should be reported to the FSA.

They are monitoring forums to see what discussion is taking place in formulating a more general view of what Aviva has done in this specific case.

I have never been able to get Aviva to confirm how many people have a Medios policy so was interested in what PMW2012 reported on about 2000 policy holders. PMW2012 are you guessing or if not what is your information based on?

I was told by my adjudicator that the team is only dealing with " 10 to 15 " complaints received by them. Not sure if this includes current cases only or previously adjudicated cases. This is a very small proportion of affected policyholders.

My thoughts still are that Aviva have calculated at outset the ramifications of their actions and weighed up the likely financial impact of various scenarios of outcomes. If they only have to address the concerns of 10 t0 15 claimants then this is not a big problem for them. If however the FOS feels that they have treated clients unfairly then they may have to look at all their policyholders. This includes those still policyholders and those who have ceased to be policyholders who ceased cover on the basis of ignorance of the facts. This was the case with Halifax and the pet insurance scandal recently.

PMW2012

The Exeter did have an excellent similar policy. I am aware that this is no longer available. Not sure what happened to existing policyholders.

heathcote wrote: »

When I took out my Medios policy I was also considering a similar 'no age related increase type policy' with Exeter Friendly. Does anyone have any knowledge of whether Exeter have been able to maintain this policy in its original format and with reasonable inflationary increases?

Guardog

Heathcote, it seems you may not have read all Posts as your question on Exeter was asked previously by O2Jim on 23 March. Both wozearly and I answered it on 24 March. However, it’s useful to focus upon the following differences between Medios and Exeter policies as the unfolding of this case has highlighted certain factors.

Key features of the Medios policy are:
- your policy term is some 16 years and is continuing;
- cover was available for life;
- your Guaranty was non-losable;
- continuing New Entrants were an essential part of Guaranty;
- total protection was provided against Age-Related Premium Increases.

In stark contrast the Exeter policy had the following features:
- the policy is for 1 year after which a new policy can be expected to be issued;
- continuing cover is available only if the policy is continued to be offered by Exeter;
- there is no certain Guaranty;
- no commitment was given to maintaining New Entrants;
- protection against premium increases for ageing was not total but subject to the Exeter policy remaining financially viable, which was determinable solely by Exeter.

If you had asked whether any of those policy differences remain, the answer seems to be NO as
- Aviva claims to FSA and FOS that your continuing 16 year term policy is not as it says but an annual renewable one, to the extent that even the FSA was misled into thinking a new policy was issued every year;
- Aviva exceeded its authority when it removed cover availability for life by wrongly adding in (without explanation) that the policy is continuable when still offered;
- Medios’ Guaranty is losable if policy no longer offered by Aviva;
- Aviva breached its Guaranty obligation to maintain New Entrants;
- premium protection, against Age-Related Increases , has become an unknown since
(a) 2012’s 12% premium increase for an Age-Related matter and the continued inclusion of that increase (plus inflation) in 2013’s premium,
(b) Aviva’s removal of New Entrants as that was a key part of its Guaranty obligation on premium increases between Age Bands.

How Medios policyholders were misled into this situation is now known to us:
- as part of 2003’s premium review, Aviva unlawfully granted itself the power to change all policy terms and caused policyholders not to be alerted to that change by claiming it formed part of an ABI initiative for consistency of terminology;
- in 2005’s documentation (without explanation) Aviva wrongly changed lifetime cover to whenever it wished to discontinue the policy;
- in January 2010 Aviva breached its Guaranty and stopped New Entrants and then misrepresented and hid that breach when representing that New Entrants remained an ongoing part of its Guaranty in each of its Terms for 2010, 2011, 2012 and now 2013.

Selectivity with facts and truth are the tactics apparently adopted by Aviva so as to cause product confusion in its apparent effort ‘to drive a coach and horses’ through the FSA’s Rulebook obligations to treat customers fairly:
1. As key product features were never qualified and, therefore, never included in Terms and Conditions, Aviva pretends they never existed. Even when current Terms and Conditions cannot operate without them (such as for Age Band definition), Aviva still pretends that those key features do not exist.
2. Even after being caught-out with stopping New Entrants, Aviva pretends such action has no effect upon its Guaranty, albeit that misleadingly ignores commercial logic and has already been found-out with 2012’s premium increase (and also the cumulative effect upon 2013’s premium).
3. Instead of your 16 year policy being the contract, Aviva pretends that solely the annual addition to the policy schedule (containing latest premium details) constitutes the contract.
4. Your 16 year term policy is wrongly held out by Aviva to have a 1 year term through characterising the Review Date as an Annually Renewable Policy and, therefore, creating the misleading impression of a new policy that’s issued each year.
5. Aviva misleadingly claims the ability to vary terms at ‘Renewal’ albeit knowing it unlawfully granted that power to itself.
6. Aviva pretends its 2012 premium increase was not Age-Related even though the explanation given to policyholders contains the word “Age” within it, when it represented that underwriters charged more for an ageing policyholder group.
7. Aviva pretends its 2012 premium increase was not caused by its own breach in stopping New Entrants (and therefore not its responsibility) even though the ageing policyholder group solely resulted from New Entrants being stopped.
8. Aviva seeks to divert attention away from the Guaranty impacting upon 2012’s and 2013’s premiums by claiming the issue should solely concern whether it can make commercial increases in premium.
We also now know that Aviva’s mendacity extended to an attempt to stop Lawton’s MP revealing the above misstatements of fact and truth to the FSA. However, as the above demonstrates, there seems little new about that mendacity; it seems Aviva just sought to mislead parties that were additional to policyholders.