Yesterday I received a letter from my health insurer NIB. I’m a customer and a shareholder, so they are investing my money in this stuff.

In the first sentence they told me they were stopping my cover in November – no questions asked, whether I like it or not. Stuff you.

The next paragraph of corporate-speak, once deciphered, explained they are doing this because they are completely incompetent. Apparently their actuaries are not very good at their jobs.

The letter tells me they have created a policy that is unsustainable. It’s my policy and it pays $1.28 in claims for every $1.00 in premiums it receives. And because they are so useless, I now have to change policies to one that provides far less cover, but costs me far more per month.

In other words, their customers have to pay for their stuff-up.

Here’s what they are doing to me (and I assume all others who had the same policy):

• Increasing my monthly premium by 6.9%
• Reducing the percentage refund I get on claims by 11.8% (85% to 75%)
• Reducing the total annual amount I can claim on a number of services, including a 50% reduction in the healthier lifestyle benefit (gym fees, quit smoking, etc) by $1,400 PA*

*The total amount I can claim PA on the current policy is $14,100 (plus unlimited preventative dental), under the new more expensive policy I can only claim $12,700.

They recommend I take this more expensive policy. And why wouldn’t they – they’ll make more money and have given me no choice.

Even worse, are the weasel words they use to fool you. Here’s one example from the FAQ’s:

Question: “What happens to my premium?”

Answer: “Your new premium will take effect from 17 November 2014. Please note that the amount of your first payment may be different from the amount detailed in your letter, as the new price is effective on 17th November 2014 and your first payment will be adjusted over this period.”

Notice how this doesn’t answer the question. It talks about the first payment amount, not the premium. The premium is the amount you pay annually, so the answer should tell you if it has gone up, down or remains unchanged. The answer given is close to dishonest, or just plain incompetent. Probably written by lawyers.

I’m not sure why the people at NIB don’t get it, but customers prefer the truth. Given NIB’s attitude, here’s something they could have written that is more truthful and explains the situation accurately:

“Your premium? What do you think will happen to it you stupid fool? We are going to rip you off mercilessly. Why should we pay for our mistakes? We’re going to increase your annual premium, reduce the percentage of refund per claim and reduce the amount you can claim each year, so just pay the invoice and don’t ask any questions. And BTW #itsgoodtobehuman.”

This is precise and explains the position clearly to the customer. The customer can then decide which wall they will bash in sheer frustration and anger, so as to ensure the resulting injury is covered under the existing policy – because it obviously won’t be covered under the new one.

In case you’re wondering about the strange #hashtag stuff, this is where the efforts of the marketing team are focused at the moment. After all, social media is far more important than being honest, or protecting customers against policies that fail. “Hey, let’s get social, join the conversation, cliche, cliche, blah, blah, blah, #itsgoodtobehuman.”

The million dollar mistake

As a shareholder I am a tad concerned about the letter, so I’m going to raise the problem at the next AGM. After all, other shareholders need to know how their investment is being wasted by the actuaries and marketers. Here’s why:

Just consider the consequences of this communication. The lifetime value of my membership, which is a family one for at least another 10 years, then another 30 years for my bride and I, plus the lifetime value of my 2 children for at least 60 years as adults.

This equates to 10 + 30 + 60 + 60 = 160 years

Using the current annual premium and not factoring any imposed price increases or inflation, or single/family memberships, a simple estimate of my family’s lifetime value is at least a conservative 160 x $6,000 = $960,000+

That’s a lot of premium. It’s certainly a lot to risk on such amateurish communications.

I must admit though it is good to be human. We can vent our frustrations when companies screw with us and we can stop using insurers for life when they treat us appallingly.

Where’s my Google? I need to search for health insurers…

P.S. In case you’re interested here’s the letter and FAQs: