Opinion: Taking the insurance risk
The insurance industry is long overdue an overhaul. It’s the only industry that managed to get an exemption from the Fair Trading Act’s ban on unfair contract terms.
I’m mulling over options for taking Dad to Western Australia for Christmas to be with my sister and her family. He’s 90 and in good nick, despite some serious “health challenges” this year. Much as none of us want to admit it, least of all him, we know this is probably the last time he will make this trek.
However, making the decision to go might just be the easy bit, compared with the much bigger hurdle of obtaining travel insurance. I’ve checked our online policy database to see if there is an insurance company that will cover a 90-year-old. Surprisingly there are options. The trick will be how willing the insurers are once we declare his pre-existing health conditions – you don’t reach 90 without having had a few organs repaired on the way!
The stark reality of failing to declare pre-existing conditions was brought home recently for the Hartley family, when mum Abby travelled to Bali on her second honeymoon, became seriously ill, was hospitalised and then died. The travel insurer refused to pay her hospital bill, which was more than $100,000. An insurance expert at the time said it was hard to know what you had to declare – policies differed wildly. It could be the past two years, or 10 years of your health history you needed to reveal depending on the insurer.
That’s where we come in. We agree the cards are stacked against the consumer easily getting these things right. And there is a lot of insurance out there that’s not worth having at all.
The insurance industry is long overdue an overhaul. It’s the only industry that managed to get an exemption from the Fair Trading Act’s ban on unfair contract terms. Imagine an industry that claims to be consumer-centric even wanting to retain unfair terms!
The exemption means that the industry can sell junk products because they have little obligation to ensure their policies are fair. I don’t like mentioning funeral insurance in the same editorial as I write about my father, but it is a classic example of bad insurance. The terms of the policies mean consumers can pay more in premiums than the cover is worth. A 64-year-old man with a $10,000 policy, who lived to age 84, could end up paying $20,000.
The government is looking at reforming the industry. We’ve made strong suggestions about what we would like to see changed – including making cover clearer, improving price transparency, fixing unfair terms and dealing with disclosure. On the latter we want consumers to be protected against accidental or innocent non-disclosure. Other countries have legislated to protect consumers when they innocently fail to disclose something. We should have best practice here too.
Dad had a knee replacement in May. And he’s back like a demon with the croquet mallet. We fully accept insuring him to travel is a must. It might cost an arm and a leg but we’ll fulfil our side of the bargain – the insurer better do the same.