How does private health care/insurance work?

indiepanda

MonkeyDr wrote: »

One more thing: now you have carpal tunnel and headaches and dizziness and chest pain you will have to declare all of that when getting a private insurance quote. I think there would be a lot of exclusions / higher premium than you are anticipating.

If I were an actuary (which I am not) then I would be more concerned about someone with undiagnosed symptoms than I would about someone with e.g. migraines (not that I am saying your headaches sound like migraines)

Speaking as an actuary and someone who used to work for a large private medical insurer, I would add

a) Yes, you must always declare every pre existing condition if you take out a medically underwritten policy. Work on the assumption if you claim for something that sounds like a pre-existing condition that insurers may well check into it and catch you out, and if they think you deliberately set out to defraud them they might cancel your cover and return the premiums. Some private medical insurance policies are written on a moratorium basis - which is effectively underwriting at claims stage - and these you aren't asked about your health up front, just told pre-existing conditions will be excluded for a certain time period and that you have to go symptom and treatment free for a number of years before you could claim. In reality this could end up having the same impact as being underwritten upfront and being told you have an exclusion.

b) Private medical insurers certainly used to be more inclined to apply exclusions to policies than charge additional premiums for increased risk - this is different to life, critical illness and income protection insurance where applying loadings to the premium for the increased risk is much more typical. I think is partly due to the fact the other policies are often heavily reinsured and the reinsurer gets large amounts of data from all the clients and employs medics to assess the increased risk of claim from various conditions and then the insurer follows their underwriting manual. Private medical insurance is rarely reinsured and it falls to the insurer to make the underwriting decisions. Also In many insurance companies, actuaries weren't involved in pricing private medical insurance until more recently so pricing was a bit more simplistic than long term insurances. For general insurance like PMI it certainly wasn't a regulatory requirement that actuaries signed off on the pricing when I worked for an insurer last and I think that's still true, whereas it's been a regulatory requirement for long term insurance for as long as I can remember.

The data the actuaries have to rely on for pricing medical insurance is based on experience from policies with exclusions not loadings, so it's a bit tricky for them to work out how much higher claims would have been if you hadn't had the exclusions and hence what loadings might be suitable, therefore I think exclusions continue to be commonplace. Where poorer health is likely to lead to higher premiums in the long term is if you buy a policy with a no claims discount and claim. Not all policies have NCDs, though I think they are more common now than they used to be.

c) As to whether un-diagnosed conditions would worry a company than a known condition - rather depends what the symptoms are and whether they are indicative of something that could be serious and what the diagnosed condition is. Uncertainty is definitely harder to judge, but an actuary wouldn't get involved in looking at individual cases, that would be the underwriter. The actuary would decide "standard" premium rates for someone of your age for your chosen policy type / cover levels etc. The underwriter would decide if your health is such that the standard rate is too low. I think its reasonable to assume vague symptoms might mean a broader exclusion than known ones, so there could be an advantage to knowing exactly what the issue is. In any case, as soon as you have symptoms its a pre-existing condition which you will be unlikely to be able to claim for.