Aviva Medios Healthcare - are we being treated fairly?

heathcote wrote: »

I have been informed by Aviva that the cost of my Aviva Medios Healthcare policy is to incease by 20% this year. I understand that Aviva have made a business decision to increase the cost so as to maintain the profitability of the product. Aviva do not sell this policy anymore and therefore there is a diminishing number of policyholders who are getting older and therefore claiming more often. Aviva sell a new product that they seem keen to move me to but it does not offer guarantees that the existing product offers, mainly no age related increases.
It seems that Aviva want to run this as a separate business and not part of their overall healthcare business and therefore sharing the risk and cost across all of their customers.
All this means is that costs will rise disproportionately for customers of Aviva Medios until the increases have reached to such a level that Medios customers cannot afford the premiums. Thereby having to cancel their policies or move to an inferior product.
This cannot be fair. Watch out because if they treat one group of customers in this way they can do the same again with another group.
The sad thing is that Aviva should be a brand that you should be able to trust long term which is what you need with such a product.

Have they said they will move you over to one of the Healthier Solutions policies and NOT continue cover? I doubt it.

and there are always other options depending on age and medical history.

Why (btw) should they be a brand you should be able to trust?

I am similarly affected by Aviva's 20% premium hike.
I believe we are being unfairly treated. Also we should not expect that from one of the world's largest insurers. Am currently seeking answers from Aviva before submitting complaint to Financial Ombudsman Service.
Number of issues involved but they all revolve around Aviva's Guaranty and whether Aviva has met policyholders' reasonable expectations in connection therewith - the present premium hike would evidence otherwise.
I will post update once Aviva has provided required policy information.
If I am right then would seem unlikely for Aviva to collect any industry awards in future as appreciate your point on need for client trust.

As a professional insurance man with over 40 years of dealing with medical covers and a policyholder involved along with around 2000 others in the despicable actions currently being undertaken by AVIVA I am taking appropriate action and would urge all other policyholders to do the same.
There is no doubt that AVIVA are in breach of The Financial Services Authorities "treating Customers Fairly outcomes 5 & 6"
5. Consumers are provided with products that perform as firms have led them to expect.
6. Consumers do not face unreasonable post sales barriers inposed by firms to change products.....
With loss ratios by AVIVA medical running at 73% (AM BEST figures 07-12-2011) the action proposed by them due to them closing the book of this business and raping the reserves built up by policyholders since they took over the account in 2000 is clearly also in breach of the FSA requirement that "firms own commercial strategies are consistent with the fair treatment of their customers"
I am currently challenging this with AVIVA and if not satisfied with their response will take this up with the Ombudsman and FSA for starters. I would encourage others to do the same including the above references as the more that complain the greater the adverse publicity they will receive.
There is no doubt that AVIVA have got this wrong or as they say on their considerable number of expensive ITV medical insurance adverts at this time "Don't make a drama out of a crisis" or is it the other way around??!!
Update 01-02-2012;
The industry is up in arms about this from various conversations I have been having so something positive will need to be done by the Insurers. Various medical insurance brokers and industry associations are likely to be pushing this with insurers so currently would suggest that you leave your policy in force, make a complaint direct to Aviva perhaps inccluding some of my suggestions above, and hold fast as things are starting to happen.....

Begs questions about present product attractiveness. First, the Insurer has stopped New Entrants in direct breach of a crucial part of Guaranty. Not only was that breach not communicated to policyholders (apparently some might have been told recently) but instead the Insurer’s Terms & Conditions misled them to think no part of the Guaranty had changed. Next the Insurer inflicted a 10%+ Age increase, again in direct breach of Guaranty. Motivation for the Insurer’s Guaranty breaches was the massive adverse movement in Age costs over those it originally predicted. Consequently, one must conclude the Insurer intends to kill this product, come what may. A dead product.
Reason not to give in, at the present time, is that Guaranty is worth £50,000+ for couple of say aged 60, assuming its terms not breached. Work it out. Take your present premium and apply publicly available Age Increases for these policy types up to life expectancy (see Association of British Insurers). Then apply standard and medical inflation. The resulting increases can then be discounted back to present value through use of Gilt benchmark yield.
The Guaranty has potential worth if one takes action as success does not necessarily benefit others. Different levels of proof are required if a policyholder feels Guaranty breaches constitute misrepresentation or fraud as the above misbehaviour seems to go beyond non-compliance with FSA Handbook rules and regulations. However, legal costs suggest the Financial Ombudsman route is most attractive where policyholders don’t group together.

The Insurer is likely to seek to limit damages on the basis that policy is renewable annually. That should not succeed as Insurer represented in late 2000 that policy could be continued for life. Plus policy is obviously long term in its nature. Nevertheless, the FSA did not cover itself with glory on Equitable Life’s Guaranty and the Insurer will be looking to apply its muscle and influence to ameliorate exposure. Also one doesn’t know whether the FSA will become responsible for business conducted from the time it is put on notice due to its supervisory failure, especially if claims cause a deficiency in the Insurer’s capital. Nor can one expect to recoup all damage from the Financial Ombudsman Service as it underestimated certain Equitable Life claims when its outcomes are compared to present Government loss calculations. Consequently, it’s not surprising that the Insurer seeks this route rather than paying out fully on its Guaranty

Speak again to your Financial Adviser and also consider legal advice if you’re prepared to pick-up that tab.
PS Policyholders sold a cheaper Healthier Solutions product might feel cheated and misled due to not being told the value of their Guaranty (this assumes the Insurer possesses funds to meet its Guaranty liabilities, which is an unknown) – apparently certain policyholders were even refused that information when it was requested.
Thank goodness you spoke to your adviser rather than falling foul of the Insurer’s direct selling or miss-selling, however one might want to term it. However, your own personal circumstances must dictate your considerations.

It might help you to know that the Committee directing the main industry association comprises divergent views. Those in the ascendancy view the Medios policy as ‘an accident waiting to happen’ as it is an annual contract where the Insurer can do anything it wants. Whilst that’s incorrect for the Medios policy, it’s often true of annual contracts and is illustrated by the present debacle on Pets insurance, where Lloyds and Halifax have pulled cover. Claimants against Lloyds and Halifax claim their policy was a lifetime arrangement but that is denied by Lloyds and Halifax. In contrast, the lifetime cover arrangement was enshrined in 'black & white' in the Medios policy wording.


You will appreciate that one of the Industry Association’s prime concerns is to gain commissions for members. Biting the hand that feeds it - Aviva being world’s 6th largest insurer (at least prior to the resolution of this saga) – is not an attractive proposition.

Focussing upon Aviva and setting aside its arrogance, hopes of manoeuvring it into a position of reasonableness ignore the fact that Guaranty costs could be in the hundreds of millions assuming a few thousand policyholders. Taking account of there being 3 different groups of Medios policyholders, that could mean over £1billion of costs to Aviva. That could be a massive hole blown in the holding company’s balance sheet. Think of the reactions of buyers of $400 million of Aviva’s 8.25% capital securities who bought in a mid-November 2011 public offering (a time period when all our complaints were surfacing)! Think of the reactions of subsequent buyers and sellers of Aviva’s securities!! If any of them are Americans, think of the litigation!!! Who knows!!!! Whichever way, dramatic downside for Aviva!!!!!

The money trail was identified by a previous Poster, How, and that showed how the premiums, we paid, for our Guaranty might have been swallowed-up in Aviva profits.

The paper trail has now also been laid bare.
1. For the 2005 renewal, Aviva set in motion its plan to avoid its liabilities when it changed policy wording so it could pull the policy at any time – the words ‘where the policy is still offered by us’ were added to ‘This Policy shall be for one year and is continuable subject to the terms in force at the time of each Review Date’. Of course nobody identified that sneaky change as Aviva made sure it did not bring it to policyholders’ attention.
Yes it might have been beyond Aviva’s rights to change the policy’s nature.
Yes it might have been against FSA rules to Treat Customers Fairly whether one focusses upon the the Handbook's Principles or 2 of the Outcomes you mention.
2. Next, in January 2010 Aviva felt safe to breach its Guaranty when it excluded New Entrants (critical to Policy pricing) but made sure not to inform Policyholders of its wrongful action. Worst still it sent out 3 years of renewals with Terms & Conditions that represented New Entrants remained.
3. Now in November 2011 it imposes a 20% increase that it can (and does) admit includes an Age Related Increase. Policyholders must ‘like it or lump it’ as Aviva can be expected to attempt to pull the policy as occurred with the above-mentioned Lloyds/Halifax situation. Also remember that Aviva pulled the plug on an OAP health plan in 2009 and left any everyone aged over 65 uninsured.


If anyone thinks Aviva can be trusted for anything other than its self-interest then ignore all past events. Also, too much is now at risk for Aviva to put things right willingly.
If anyone expects Aviva to change without the direction of the FSA then think again and as many times over as possible.
FOS compensation needs to cover the full value of the lost Guaranty plus the last 3 years’ premiums (if claimants would not have otherwise insured).