Critics of travel insurance often argue that claim denials are too frequent, unfair to the customer, and might be avoided if issuers vetted policy applications at the time of distribution instead of when a claim is made. The rationale for that argument is that applicants could then be certain that their policy would pay off in case of medical emergency abroad.
Sounds reasonable, as a principle—except that it’s impractical given the millions of policies issued to Canadian travelers each year.
At present, most policies are issued on the understanding that customers provide complete and accurate information about their medical histories when applying for insurance. Some are asked a few questions about recent treatment interventions, medication use, or hospitalizations; others, usually elderly travelers, are required to complete detailed medical questionnaires designed to give underwriters a more precise assessment of their health status.
And there are other policies—usually attached to credit cards—that ask no questions but set limits on what they will not cover: such as trips over a certain duration (e.g. 15 days), any symptoms or treatment related to pre-existing conditions, any applicants over a certain age (e.g. 55 years).
All of these coverage options depend on some degree of vetting. The problem is that they depend only on the applicants’ interpretations or understanding of their medical history: why are they taking certain medications? What is the purpose of tests they have undergone and what are those test results? What has their doctor told them about their symptoms and treatment options? In effect, do they know what is in their medical records?
Demystify the Medical Record
Too often, they don’t. Sometimes it’s their fault for not asking their doctor. Other times it’s their doctor’s fault for not clearly explaining their conditions, examination results, need for medications or tests—in a way non-medical professionals can understand.
But in most cases where claim denials are issued, it’s because the information provided to medical underwriters is wrong or incomplete. And it’s only after a claim is made that thorough “vetting” by the insurer is activated: to make sure that the information provided by applicants when applying, coincides with the facts recorded by their physicians in their medical records. If it does, and the claim is valid, it’s paid. If it’s at odds with the medical record, it may be denied.
Sounds harsh. But that’s why insurers warn applicants to carefully review the responses they have given to the questions asked and if they’re uncertain about the questions or their medical histories, to ask their doctors help in completing their applications,
Is Pre-Application Vetting Practical?
As already noted, some degree of pre-application vetting is already being implemented. But the argument for pre-application vetting would require every applicant for travel insurance to submit their updated medical records to their insurers every time they plan a trip. And then the question comes: who is going to evaluate those millions of medical records? Who is going to pay for their evaluation—which can only be done by professionals who understand medical records—and many of which run to hundreds of pages if the client/patient is in imperfect health (as most of us are).
Leaving the responsibility for such vetting to the customer’s doctor, summarized in a short “clean bill of health” has shown itself to be an unreliable reference. Doctors owe their primary allegiance to their patients, and most Canadian doctors have not been educated or trained in the principles and requirements of travel insurance. They don’t know how it works.
Are Denials Really Rampant?
Advocates for pre-application medical vetting argue that far too many travel insurance claims are being denied, that many travelers consider insurance a gamble, and that provincial governments should step in and provide extended coverage for out-of-country travelers to do what private travel insurers are unwilling to do.
Let’s look at those arguments.
Earlier this year, the Canadian Council of Insurance /Regulators (CCIR) issued a position paper inviting travel insurers to “harmonize” their efforts across provinces to provide fair and consistent protection of consumers. It noted, specifically, that when consumers end up being unable to cover significant medical bills without the benefits of insurance or when their claims are denied as a result of a misunderstanding of their coverage, the media publicity enveloping such events erodes consumer confidence in the role of travel insurance.
It’s a contention that representatives of the industry concur with and they have confirmed that they are working on various levels to simplify, standardize and clarify their products so as to strengthen consumer confidence in them.
Denials are Inevitable. So is the Need for Insurance.
In 2015, the CCIR working group surveyed 33 travel insurers and financial groups in all provinces, focusing on their 10 main products (12 million individual policies and group insurance certificates including those issued by credit cards, licensed agents, and travel agencies). They indicated that claims were made on about 2 percent of the total number of policies/certificates issued, with only 7 percent of those claims denied.
That roughly coincides with a KPMG survey commissioned by the Travel Health Insurance Association in 2014 which showed that 95.3 percent of Canadians who purchased travel insurance had their claims paid—almost 5 percent who had claims, had them denied.
Good enough? Not nearly.
Travel insurers still have a way to go to clarify the limits of their products, to make them easier to understand, free of medical or legal jargon, and friendlier to customers in less-than-perfect health. And they admit it.
Claim denials will continue to be a fact of the life wherever they are dependent on human error. But they have to be balanced against the values provided to travelers by private insurance providers.
Shopping around for insurance? Match your travel style with the right coverage.