by Guy Shmueli

During the last few years the Israeli media published many stories of Insureds who purchased Long Term Care policies and who became involved in a lengthy and complex process when trying to exercise their rights to obtain said insurance benefits.

The issue raised awareness when during a recent meeting of the Israeli Parliament (Knesset) Committee regarding the above matter, when one Knesset member burst into tears telling his grandmother’s story and the lengthy road she was forced to take in order to obtain the insurance benefits of her long term care process. “She is not an actuary and she doesn’t understand a thing about insurance and the risk involved” he cried.

The media coverage of the incident led the government to take action. Last week the Minister of Finance and the Commissioner of the Capital Market, insurance and long term saving, published a new draft directive designed to ensure better treatment of insureds with long term care insurance policies.

The new directive intends to shorten and simplify the claim process, increase the objectivity of evaluation of the insured’s medical situation.

In order to achieve the goal of simplifying the process it will be necessary for insurance companies to rely on the medical examinations performed by the National Insurance Institute of Israel (NII) for receipt of long term caregiving benefits.

The new directive prohibits insurance companies from conducting independent evaluations relating to the functioning ability of the Insured, if there is detailed information on the condition of the insured in previous examinations conducted by the NII.

The insurance companies objected to the draft directive contending that is can create a wedge between them and their reinsurer.  The insurers allege that one of the basic terms of an insurance contract is the insurers’ ability to pay benefits only to the insureds for claims which are covered under the policy. If the insurer pays according to the NII evaluation, it is possible that the NII will approve claims which are not covered where its decisions are based on different tests and standards under the policy.

In addition, the directive refers to a few key issues:

Shortening and Simplifying the Examination Process:

The insurance companies are requested to:

  1. Set schedules for every stage of the claim and appoint a case manager who will be the only referee in respect of the claim, from its submission to the conclusion.
  2. Prepare a single claim form which will be submitted by plaintiff together with a waiver of confidentiality form.
  3. After signing these forms, the insurance companies should obtain all medical information required without further requests from the insured.

Increased Fairness

The directive restricts the investigation which may be conducted by an insurance company.  A private investigator will not be permitted to approach the insured and request him to perform any tasks. He can only speak with the Insured.

If an insurance company wishes to appeal on the evaluation of the disability as decided upon by the NII, the decision on the insured’s disability will be made by an external assessor who is not dependent on the insurance company.

The directive requires the company and the medical assessor on its behalf, to be fully transparent with the insured throughout the entire examination process.

The insured has the right to appeal at any time regarding the decision of the insurance company.

Maintaining the Test Objectivity:

Expanding the list of professionals authorized to evaluate functional capacity and eliminating conflicts of interest i.e.  determining a minimum number of appraisers per company and allowing each appraiser to join the list of evaluators. In addition, the draft directive includes provisions limiting the ability of an insurance company to exclude an assessor from the list and forbidding conflicts of interest and influence on appraisers.

The directive limits the amount of information which an insurance company may provide to its medical appraisers prior to their evaluation. It also sets a random nomination system which cancels the ability of the insurance company to influence the choice of the selected evaluator.

The evaluation of functional capacity results will obligate the insurance company – the companies must act according to the test results of said evaluation.

Conclusion:

Although the draft directive did not yet become final, the harsh approach towards insurance companies who deal with personal lines, may predict the future treatment Israeli Insurers are expected to receive from the Regulator.

The Minister of Finance stated in a recent press release: “We are continuing to improve the response to long term care insureds. Insurance companies should treat the insured with dignity and should provide them with quick and fair service. We will oblige them to act accordingly. We will make sure that insurance companies will act to fully provide the Insureds’ rights, which they deserve according to the insurance policy and they will pay policyholders according to the law”