Pre-existing conditions exclusion and loading

Purpose

Because private health and daily sickness benefits insurance is priced on an individually underwritten basis, conditions or complaints already present at the time of application are treated separately. Depending on severity and expected cost risk, the insurer may exclude such pre-existing conditions from cover, apply a premium loading, or set an extended waiting period, in order to avoid anti-selection to the detriment of the wider pool of policyholders.

Effect and limits

A benefit exclusion usually applies only to the named condition and its direct consequences, leaving the rest of the cover unaffected. A premium loading, by contrast, is charged as a percentage or fixed surcharge on the base premium and covers the elevated risk on a blanket basis without narrowing benefits. Both tools rest on the pre-contractual duty of disclosure on the application form; a culpable breach can give the insurer further options to adjust or terminate the contract, independent of the exclusion or loading originally agreed.

Negotiation and practice

Where an application is declined, excluded, or subject to a high loading, it is often worth seeking a second opinion from another insurer, since risk assessment can vary between providers. After several years without related claims, some insurers will, on request, review and potentially lift an existing exclusion or loading. When switching insurers, an existing exclusion is generally carried over by the new insurer unless otherwise agreed.

The treatment of pre-existing conditions in Germany is closely tied to the pre-contractual duty of disclosure under Section 19 VVG, which frames the health questions an insurer may ask; the exclusions and loadings themselves are governed only by the insurer’s model conditions. Switzerland and Austria have no directly comparable statutory rule for exclusions and loadings in private health insurance; practice there likewise follows the relevant policy conditions.