The Capital Market Authority is acting to increase supervision over group health insurance policies. In a draft of instructions that it published, the insurance companies are required to hold and approve a permanent framework plan for the group policies as a single block, and alongside it an appendix including a basket of additions and renewals and to offer it alongside the framework plan. The introduction of a framework plan for group health insurance will be in accordance with the individual plan marketed by the insurance company with the addition of the optional changes requested by it. This is for the purpose of control and approval of the coverages requested by the company All this, contrary to the situation today where for most group policies, which are intended for groups of under 10 thousand insureds, approval of the supervision is not required. Until now the supervision instructions required approving only group policies numbering over 10 thousand insureds. At the Capital Market Authority they refused to relate to Policy’s question whether a failure or defect was identified in the group policies market that required the intervention, and stated that the problem is “lack of uniformity, waste of resources and systemic inefficiency”. At the Authority they noted that the existing mechanism burdens bureaucracy and resources both on the insurance companies, both on the regulator and in certain cases also on the policyholders. According to the Insurance Supervision data, the return rates in group policies (85% in medical expenses insurances) are significantly higher than the return rates in individual insurances (45%). For details – see table. The solution proposed within the framework of the amendment:
*Permanent framework plan: A permanent plan for the conditions included in individual health insurance which was approved in advance and in writing by the Commissioner for each insurer, and does not differentiate between the size of the insured groups. This plan is permanent, where only change requests are those requiring the Commissioner’s approval.
*Exemption from individual approval for each group of insureds: An insurer will be permitted to introduce an insurance plan matching the framework plan without notifying the Commissioner thereof or receiving his approval prior to its introduction.
*Approval of optional changes appendix as a single block: Each insurer will be able to approve in advance appendices to the framework plan, as a sort of “basket of additions and benefits” which will be approved as a single package. Upon policy renewal, it will be required to approve vis-a-vis the Commissioner solely the changes appendix.
*Exemption from approval of changes included in the approved appendix: Addition or removal of coverages defined and approved in advance within the framework of the appendices to the framework plan for a specific group, will not be considered as a change necessitating submission or re-approval by the Commissioner;
*Flexibility in the additions offered to different groups of insureds: In coming to insure a specific group, the insurer will be able to offer it part of the coverages and the changes included in the approved appendix, or all of them, without being required to get the Commissioner’s approval, and without having to offer the same changes for each group of insureds, provided that the additions were taken from the appendix that received the Commissioner’s approval;
*Protection for groups without an individual plan: Insofar as the insurer does not have an approved individual plan, a notice on the introduction of a framework plan for group health insurance will be submitted in accordance with the remaining provisions of the law. The new instructions allow operational flexibility for insurers in a manner expected to shorten the time period for approving products and providing a response to market needs in a way that will benefit the insureds. In addition, they will lead to reduction of the bureaucratic burden and streamlining of control mechanisms, as well as to ensuring the preservation of the rights of the insureds.
The central problem in collectives: price surprise and product surprise
Nechama Goldwasser, Chairman of the Health Insurance Committee at the Chamber of Insurance Agents, stated in response: “This is a welcome move by the Capital Market Authority. The group health insurance policies give a significant benefit in return for premium paid to the insurance company. The benefit is both in the product and in the price. The central problem is created when a client leaves the workplace before retirement age, or to organizations that do not have group health policies. The client then encounters two surprises: a price surprise and a product surprise. There is no logic that a high-tech employee who left or was dismissed from his workplace and bought a group product through his employer for the long term will be surprised that precisely when he needs the product, and continued the insurance coverage sequentially, the component that he needs was removed from the policy. For example, I encountered an insured who received a drug not in the basket through the employer when he was in the group insurance. When he transferred to the individual policy sequentially, he learned that the definitions are different. Only through a stubborn struggle did he continue to receive a refund from the insurance company. In conclusion, even if from a business perspective I doubt the profitability of these policies for the insurers, and it seems to me that the insureds of the individual policies who were insured through Chamber member agents finance them, from my perspective there is no problem that the collectives will receive a significant discount in price and a larger return on every Shekel they paid. At the same time, when the client is harmed in the product upon leaving the workplace – then the Authority intervenes and it is good that it does so.”
