Beware Claim Related Medical Insurance Plans

01 December 2020

The lure of 'cheap expat medical insurance' premiums and contracts

Key Points Summary

Fundamental Structure of CRMI Plans Creates Inherent Conflicts of Interest - Claim Related Medical Insurance plans operate on a flawed business model where insurers financially benefit from denying claims. Unlike traditional insurance with fixed premiums, CRMI providers earn higher profits by minimizing claim payouts. This creates a direct conflict with policyholders' interests, resulting in aggressive claim scrutiny, arbitrary interpretation of policy terms, and unexpected coverage limitations when medical care is most needed.
Practical Implications Lead to Devastating Financial and Health Consequences - The consequences of CRMI limitations become apparent when policyholders face serious medical conditions requiring expensive treatment. Policies may be retroactively canceled, claims denied on technicalities, or coverage amounts significantly reduced through arbitrary pricing methodologies. These practices leave expatriates financially vulnerable in foreign healthcare systems precisely when they need protection most, potentially compromising treatment decisions and health outcomes.
Jurisdictional and Language Barriers Compound Coverage Risks - Insurance contracts governed by foreign legal systems introduce additional layers of complexity through varying interpretations of key policy terms. Technical insurance terminology rarely translates precisely across languages, creating critical misunderstandings about coverage scope. While insurers may provide marketing materials in multiple languages, these translations include disclaimers stating that the original contract language prevails in disputes. This creates situations where policyholders make healthcare decisions based on translated summaries, only to discover during claim processing that the actual contract contains limitations or exclusions not apparent in translation.

Have you unwittingly purchased a CRMI (Claim Related Medical Insurance policy) lured by seemingly discounted premiums?

If you did you are not alone - many unsuspecting purchasers of expat medical insurance have also fallen into the same trap and wish now that they hadn't.

Did you fully appreciate the long term consequences these policies can have on your financial well-being?

If so and you took the time to research, all well and good. Very sadly however the vast majority of policy holders we come into contact with simply have no idea of what awaits after a claim has been met by a CRMI policy nor do they understand what the impact of the terms and conditions will have on their expat medical insurance plan going forward.

What are CRMI medical insurance plans?

We are all aware that medical insurance premiums tend to rise faster than normal inflation due in part to innovative and very costly new technologies and drug therapies alongside ever Increasing client claims

In an effort to reduce medical insurance plan premiums some insurance companies have taken to issuing what are known as CRMI (Claim Rated Medical Insurance) plans.

Why are CRMI medical insurance plans not a good choice?

Let's first consider a non-CRMI contract issued by all of the companies we support. When a client purchases a medical insurance plan he can rest assured that if he needs to make claims two things will remain constant :

1. His cover will be unaffected in future years and
2. His premium will be unaffected (other than general increases that apply to all clients)

However with a CRMI plan there are fundamental differences that can greatly impact cover in future years and can destabilise the best laid of financial plans.

A plan holder of a CRMI contract having made a claim will find at renewal that the insurer will assess if an increase over and above general increases should be applied.

There are no limits to what increase an insurer can levy at renewal and any increase that is applied is non-negotiable.

Clients will have no certainty of what future premiums will be after a claim and absolutely no idea as to whether they will even remain affordable!!

It is by being in control of future claim liabilities that insurers that issue CRMI policies are therefore able to offer initial lower premiums.

The additional jurisdictional and language factors related to CRMI policies

The complexities of CRMI policies are further exacerbated by jurisdictional legal variations and language barriers that expatriates frequently encounter.

Insurance contracts governed by unfamiliar legal systems may contain provisions that operate differently than in one's home country, creating dangerous blind spots even for the legally astute.

These jurisdictional differences mean that concepts like "reasonable and customary" charges or "medically necessary" treatments can have substantially different interpretations across borders.

Additionally, insurance contracts are typically written in the local language, with technical terminology that rarely translates precisely, leading to critical misunderstandings about coverage scope.

Even when insurers provide marketing materials or summaries in English or other languages, these translations almost universally include disclaimers stating that the original contract language prevails in case of discrepancies. This creates a situation where expatriates may make healthcare decisions based on their understanding of translated materials, only to discover during claim processing that the governing contract language contains limitations or exclusions that weren't apparent in translation.

Such jurisdictional and linguistic hurdles represent significant hidden risks that compound the already troubling aspects of CRMI plans described above.

Do NOT rely on translations of policy contracts to cover medical bills

A typical case example where a CRMI expat medical insurance plan contract fails the client.

By way of example consider a typical cancer diagnosis - cancers and cancer treatments are often very expensive particularly when there is a need for long term costly care.

Due to the fact that CRMI insurers can (and mostly do) levy discretionary increases at renewal after a claim submission, it is not uncommon for plan holders that now pose a high risk for claims to witness their premiums sky rocket!!

In this way CRMI insurers have the power to simply price clients out of cover.

Clients that are forced to abandon renewing cover due to exorbitant cost increases then face the consequences of having to fund all future medical bills themselves if they cannot meet the new increased premium level - for many such increases simply cripple their financial well-being.

For the CRMI insurer (and the shareholders of the insurance companies issuing CRMI plans) they are effectively ‘off the hook’ as it is the client that has cancelled the contract and not themselves.

The client meanwhile is not only faced (if he can afford to) with paying all his own medical bills, he has also effectively made himself uninsurable as any other insurer will almost certainly refuse to offer cover.

For those with ‘deep pockets’ and extremely healthy cash reserves in the bank there may be no issue, but for the vast majority of individuals the future suddenly becomes extremely worrisome and very bleak.

Non CRMI policies do not discriminate against policy holders in this way - the only premium increases that apply are those that apply to all individuals within an age band.

It is imperative that you FULLY understand the contract terms

How do I know if I have a CRMI expat medical insurance plan?

As you might expect many of the insurance companies that promote CRMI contracts tend not to reference the above factors knowing that the uptake of CRMI contracts would decline sharply - these companies much prefer to highlight alternative plan attributes.

More often than not the **CRMI clauses are buried deep within the plans terms and conditions** which quite frankly the vast majority of policyholders never read until they are forced to, and when it is very often too late to do anything about.

We study insurers terms and conditions to ensure our clients do not fall into the CRMI traps.

If you need help and guidance in respect of your expat medical insurance cover we can assist - please contact us

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