Criticism Vitality's new framework not fit enough

Criticism Vitality's new framework not fit enough

Vitality's new fair, intuitive and transparent (FIT) framework does not go far enough to iron out problematic issues for private medical insurance customers, according to advisers.

Drewberry Insurance, Regency Health and Specialists4Protection have applauded Vitality's work in creating the framework but said its introduction at the end of 2016 was a "missed opportunity" to resolve some issues over claims.

According to Brian Walters, principal of Cheltenham-based health insurance brokers Regency Health: "It's laudable that Vitality has attempted to address what has become a problematic issue for PMI customers, but this is a missed opportunity."

He said the new framework, which aims to ensure a fairer, more intuitive and more transparent pricing approach for VitalityHealth members, has "failed to adequately address the issue of family members impacting upon each other's premiums, which all other insurers have addressed."

According to Greg Levine, director of intermediary at Vitality, there has been a change, in that previously pricing was amended per policy, not per life. 

But the new FIT model has moved away from this and now it sets different thresholds, depending on whether the claim is for a family or an individual. For example, for a small claim, the individual level is £250 and the family threshold is £375. 

He said these thresholds would address the issue of family members impacting on each others' premiums.

While the new framework will result in less severe claims loadings on individuals, Mr Walters has also warned claimants could continue to be penalised year after year, which is in contrast to a traditional no-claims discount (NCD) structure where the member will eventually bottom out.

There is also no option to protect against a claims loading, he said. As Vitality has rolled out this new FIT framework on existing members, Mr Walters is concerned that some claimants who have "already bottomed out on their NCD scale will now see further claims-related increases."

Tom Conner, director at Drewberry, said although no one ever likes the concept of their premiums going up, from car insurance people at least understand what a no-claims discount is, and there is safety in knowing that it has a bottom.

But he said: "The new Vitality method doesn’t appear to have this.

"It is true the exact mechanics behind how moving down no-claims discount levels impacts premiums isn’t particularly clear, but the overall concept is at least understood. This would suggest that evolution rather than revolution could be the answer."

Despite this, Mr Conner said Vitality had "done well" in setting its proposition apart in the market by providing alternatives to the status quo.

Advisers pointed out that Vitality's current policy wording states: ''You will never pay more than the base rate, no matter how many claims we pay."