In recent years, the Israeli media has published many stories of insureds who purchased long-term care policies and became involved in a lengthy and complex process when trying to exercise their rights to obtain said insurance benefits.
Awareness of the issue increased recently when, during a Parliament committee meeting on the matter, a member of Parliament burst into tears telling the story of the lengthy road that his grandmother had been forced to travel in order to obtain the insurance benefits from her long-term care policy, stating that "she is not an actuary and she doesn't understand a thing about insurance and the risk involved".
Media coverage of the incident led the government to take action. In April 2017 the minister of finance and the commissioner of capital markets, insurance and long-term savings published a draft directive designed to ensure better treatment of insureds with long-term care insurance policies.
The new directive intends to shorten and simplify the claims process and increase insurers' objectivity when evaluating an insured's medical situation.
In order to achieve the goal of simplifying the claims process, insurers must rely on medical examinations performed by the National Insurance Institute of Israel (NII) when assessing long-term caregiving benefits.
The new directive prohibits insurers from conducting independent evaluations relating to the insured's functioning ability if detailed information on the insured's condition has been detailed in previous NII examinations.
Insurers have objected to the draft directive, contending that it could create a wedge between them and their reinsurers. Further, they have argued that one of the basic terms of an insurance contract is the insurers' ability to pay benefits to the insureds only 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 under the policy when its decisions are based on different tests and standards.
The directive refers to the following key issues.
Shortening and simplifying examination process
Insurers must:
- set schedules for each stage of a claim and appoint a case manager who will be the only referee in respect of the claim from its submission to its conclusion;
- prepare a single claim form which will be submitted by the plaintiff together with a waiver of confidentiality form; and
- obtain all medical information required without requesting further information from the insured after the appropriate forms have been signed.
Increased fairness
The directive restricts the investigation that an insurer may conduct. A private investigator will not be permitted to approach an insured and request him or her to perform any tasks. He or she can only speak with an insured.
If an insurer wishes to appeal the evaluation of disability as decided by the NII, a decision on the insured's disability will be made by an external assessor who is not dependent on the insurer.
The directive requires the insurer and the medical assessors acting on its behalf to be fully transparent with the insured throughout the entire examination process.
The insured has the right to appeal the insurer's decision at any time.
Maintaining objectivity
The draft directive has expanded the list of professionals authorised to evaluate functional capacity and eliminated conflicts of interest (ie, determining a minimum number of assessors per company and allowing each assessor to join the list of evaluators). Further, the draft directive includes provisions limiting the ability of insurers to exclude an assessor from this list and forbidding conflicts of interest and influence on assessors.
The directive also limits the amount of information which an insurer may provide to its medical assessors before their evaluation. It also sets a random nomination system which cancels the insurer's ability to influence the selected assessor's decision.
Insurers must act according to the results of said evaluation.
Although the draft directive is not yet final, the harsh approach towards insurers that deal with personal insurance may provide an insight into the future treatment of Israeli insurers by the regulator.
In a recent press release, the minister of finance stated that:
"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."
For further information on this topic please contact Guy Shmueli at Levitan, Sharon & Co by telephone (+972 3 688 6768) or email ([email protected]). The Levitan, Sharon & Co website can be accessed at www.israelinsurancelaw.com.
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