FCCA: Difficult to find suitable option among voluntary medical expense insurance policies

The Finnish Competition and Consumer Authority (FCCA) has investigated the importance of voluntary medical expense insurance policies for adults in the Finnish health care system. The study showed that there are considerable differences between insurance policies and that comparing them is difficult for consumers. Medical expense insurance policies also often involve restrictions that may limit consumers’ freedom of choice and hinder competition.

Nearly 1.2 million Finns have a voluntary medical expense insurance policy. Considering how widespread these policies are, little attention has been paid to them in public debate on the providing of health care services required by citizens. The FCCA has prepared a status report on voluntary medical expense insurance policies, surveying their weaknesses, strengths and challenges.

Impartial information needed to aid in comparison

The FCCA report shows that there can be quite considerable differences between insurance policies as to what they do and do not cover. Insurance companies are required by law to disclose essential information on their insurance policies, but comparing policies on the basis of that information is laborious. Indeed, the terms and conditions of insurance policies are often written so ambiguously that the consumer is unable to understand them or interprets them differently from the insurance company itself. It would improve the comprehensibility of the terms and conditions of insurance policies and of their compensation principles if insurance companies were to transparently give illustrative case samples of harmful events that are covered or not covered, as the case may be.

Comparison of insurance policies is also complicated by the fact that a person taking out a policy cannot know how his or her health will develop in the future and what examinations and treatments he or she may possibly come to require. A consumer who considers taking out an insurance policy would need impartial information on what kind of policy would be the best for him or her in the current situation in terms of cost and compensation. Such expert information may be provided for instance by an insurance broker specialising in medical expense insurance, and this would help the consumer select a suitable policy.

Implications for freedom of choice and competition

For a person to qualify for a medical expense insurance policy at all often requires that that person must have a home insurance or accident insurance policy from the same insurance company. Persons insured are generally also required to go to service providers designated by the insurance company for any examinations and treatment required.

The FCCA report highlights that these linkages have a detrimental impact not only on the consumers involved but also on society at large. They impair consumers’ willingness to switch insurance companies, restrict their potential for taking out an insurance policy that best suits their life situation, and also have a negative impact on competition between insurance companies.

Dedicated insurance products for the elderly

Whether a person qualifies for medical expense insurance depends on the person’s age and pre-existing conditions. As the number of elderly people in the population increases, an increasingly large percentage of citizens are disqualified from taking out medical expense insurance.

The FCCA report proposes that insurance companies take the needs of the elderly into account by developing insurance products suitable for them. Some insurance companies have already responded to the emerging situation by introducing to their offering medical expense insurance policies that are more limited than traditional ones, policies on which the age and medical history of the person insured have no bearing.

FCCA report Voluntary medical expense insurance policies for adults on the Finnish health care market (in Finnish)

Further information: Helena Tuorila, Senior Research Officer, tel. +358 29 505 3653