Poor advice from inexperienced financial advisors is leaving expats without the right private health cover.
A growing row is raging in the industry over how to source the correct private medical insurance cover for expats.
Many industry experts are criticising referral schemes that offer financial advisers up to 45% commission on premiums for tipping off health insurers about expats who might need cover.
The providers then pay 5% to 10% renewal commission each year if the expat signs up for further cover.
For instance, thousands of IFAs work in the UK selling a range of products, including mortgages and life insurance, but only 200 specialise in health insurance.
Professional advice
So rather than pass across their client to a health insurance specialist, who will have access to the latest deals and have experience in the sector, it’s likely that the IFA will instead put their client in touch with a normal health insurance provider.
The problem is that many of these are offering overpriced cover and are increasingly paying commissions to IFAs for new business.
When it comes to expats looking for health insurance cover, they will need someone who not only understands the market but will trawl the many providers to find the best deal available but also the most suitable.
The magazine says that many policies are overpriced and rather than not offer a quote, particularly for covering expats moving to the US, the insurer is likely to overcharge rather than turn the potential business down.
Among the firms offering to pay referrals are Bupa, PruHealth, AXA PPP healthcare and WPA.
Broker complaints
The companies which do not offer referral fees include Exeter Family Friendly and Aviva.
Martin Howell, the managing director of broking firm MediSearch, said in specialist magazine Health Insurance: “How does a client know if the broker they are speaking with has several complaints against them with the Financial Ombudsman Service, or whether the broker is dealing with the insurer which is paying the best commission?”
However, that then brings in another problem since the incentive for an IFA to move their client onto a better paying commission rather than stick around for renewal – even if that firm is offering the best cover – is tempting and almost too good to miss as an opportunity.
The bottom line is that anyone looking for health insurance should shop around and do their research – but, more importantly, if they are heading overseas to retire, live or work then they would be well advised to find a specialist broker who will provide the cover they need.