The advent of private medical insurance (PMI) sales online has raised fears of mis-selling and inadequate checks. Helene Dancer consults the experts

Selling private medical Insurance (PMI) online could create a scandal on the scale of the recent pension debacle. Industry experts say the market is opening itself up to mis-sold policies as the popularity of online buying increases.

The problem lies with the complexity of PMI. Customers need to be aware of intricacies of the policies and whether they are opting for a fully underwritten product or one based on the moratorium which operates in the PMI industry.

This means a policy will not cover pre-existing medical conditions for a period determined by the insurer.

Customers also need to be aware of the extent of the exclusions and how much the insurer should know about their medical history. The question is: can this all be explained adequately online?

Health Care Plus partner Bill Poynton does not think so. "There is no substitute for personal contact when selling a medical policy," he says. "It is best to have at least a phone conversation. Selling PMI online opens it up to mis-selling."

Poynton, who is former chairman of the Association of Medical Insurance Intermediaries, thinks PMI based on the moratorium is where mis-selling could most occur.

"Customers might not realise the full extent of the moratorium and the exclusions in the policy," he says. "They also might think that small conditions are not important but they may be a precursor for other, more serious conditions."

"The moratorium option is fine as long as the policy is discussed face to face and the medical history is gone through. The problem with the internet is that no one is asking questions.

"Selling PMI face-to-face or on the telephone draws out evidence of customers' health."

Bupa head of personal sales Joanna Caparn thinks Poynton is making a good point. "A PMI purchase is a significant one and it is good to get advice and speak to someone either on the phone in person," she says.

"We believe people should have the choice to buy online." Bupa offers its Heartbeat PMI policy online, but it is only available to customers with no pre-existing medical conditions.

She says: "A number of people like to purchase online and we have all our terms and conditions on the website, but a larger number buy the policy by phoning. They get the initial information off the website."

Caparn thinks this is possibly more valuable than a simple purchase. "People need to understand what they are buying," she says.

Essential Travel director Stuart Bensusan used to sell PMI policies and said it is a very thorough process and one that the internet cannot replace. "The screening of PMI is absolutely right," he says.

"People don't fully declare their medical histories because they see some ailments as not being classified as pre-existing medical conditions.

"There are some things you wouldn't think to mention. Hereditary conditions are also excluded from some PMI policies and often customers are not aware of this." He also suggests that related conditions to pre-existing medical conditions need to be explained properly.

But there is one leading light who does see the benefits of selling PMI online. Healthcare Navigator chairman Roger Hymas says: "There are people who use only the internet, so there is room in the market for online purchases for PMI."

He believes "sophisticated purchasers" would use such a facility. "People have to learn the market and need to take time out to understand medical underwriting and moratoriums and the different conditions," he says.

"The one thing that is very important is that the ABI's PMI brochure should be on the websites. There is full literature in every brochure pack and this makes sense from the consumers point of view."