Insurers must tell customers of possible shortfalls

In December, the Office of Fair Trading published its report on the private healthcare market. It concluded that competition might not be as strong as it could be and so it has provisionally decided to refer the sector to the Competition Commission for investigation.

The OFT is currently consulting on the report before deciding whether its provisional decision should be confirmed. The OFT has the power to accept undertakings made during the course of the consultation instead of making a reference to the CC but this seems increasingly unlikely.

The report contains examples of specific undertakings or orders that might be agreed or made by the CC to address the adverse effects identified.  These include: a ban on provisions in contracts between health providers and private medical insurers that are triggered by the insurer recognising new rival facilities to its network.

The OFT has persuaded regulators and trade bodies to strongly encourage health insurers to make it clearer to customers that they may face extra shortfall payments when there are limits which apply to the amount payable under their insurance policies.

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Insurers must tell customers of possible shortfalls
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