19 July 2003

After five telephone conversations, 12 letters and a complaint to the Financial Services Ombudsman over a period of from December 2001 to May 2003 (18 months), last week I finally received a £1042.72 refund from AXA PPP for excessive health care insurance premiums charged between 1998 and 2001.

Despite receiving a refund, I am not at all satisfied by the explanation given by AXA PPP. What I am being told is that although I took out insurance cover in 1995 and kept it current throughout (until I cancelled it in 2001), AXA PPP decided to hike my premiums substantially to recoup some minor claims for conditions from which I did not suffer when first I took out their health insurance policy.

They admit that I should have been offered the choice in 1998 to reinsure, excluding these conditions, and my premiums thereafter could have been lower.

But to me this negates the purpose of insurance. I took out my policy in 1995, and continued it in 1998 in order NOT to bear exposure to private health care costs. Had I known in 1995 that when I eventually left the group scheme I would be expected either to lose cover or to refund (in the form of higher premiums) the costs of treatment to date, I would never have joined the scheme in the first place, because I like my insurance to do what it's meant to, i.e. remove risk.

For health insurance to work, as long as you maintain cover, all future costs from a condition must continue to be covered: paying out one year and then raising the premium is not called insurance, it is called lending.

It seems the Ombudsman disagrees, which I find extraordinary: they seem to be saying that the problem was not that I had to pay higher premiums for conditions against which I had originally taken out insurance, but that I had an alternative - to lose cover for these conditions altogether. Do they understand the principles of insurance?

The more likely explanation for AXA PPP's pricing policy is, of course that they simply increase the premiums of loyal customers in order to subsidise the acquisition of new customers. There is pretty clear evidence for this in the letter of 21 October from Sarah Pearse, AXA PPP's inept Communications Director, where she talks about offering "a discounted premium" to "virgin customers".

My final complaint is about the extraordinary time and effort it took to get a refund. Peruse the correspondence and it immediately becomes clear that AXA PPP are in no hurry to settle. Indeed the opposite. First they insisted that I go through a tedious multi-stage complaints procedure, in which they just repeated spurious information. Then they claimed that I introduced "new issues" when I did not - the effect being to stop the Ombudsman from prioritising the dossier because there still appeared to be discussions ongoing between AXA PPP and me. Of course a long delay plays to AXA PPP's advantage as few individuals are as obstinate as me.

The bottom line is: anyone who has seen increases in their health insurance premiums over the last few years should - particularly if their insurer is AXA PPP - make an anonymous enquiry about the cost of cover for an identical new customer. They might, like me, be extremely surprised by the results, and I wish them the best of luck in eventually getting their refunds.