Bristol-based insurer April UK reported strong PMI growth in January and February of this year. Here, Sarah Buck, its chief executive, reveals the reasons for this growth
FM: April UK has reported record PMI sales, driven by its inSpire product. Why do you think the product has been so successful and driven such growth?
SB: For us, inSpire has worked so well because people are paying only for what they need. If people have a Spire hospital close to them and are happy to receive treatment there, why would they pay extra for the privilege of having access to hundreds of other hospitals nationwide?
It also helps that inSpire's premiums are positioned very competitively in the marketplace, and it genuinely challenges people to think about where they would be happy to receive treatment.
We understand that it isn't the solution for everyone: inSpire currently represents about 65% of all our individual new sales, with the remaining 35% still going for our standard PMI plan, which is your more traditional offering with a menu-based option system and access to all private hospitals.
However, it's clear that there is a market out there for this type of plan, and increasingly both intermediaries and consumers are considering it.
FM: What intermediary feedback has been received?
SB: The plan was launched in January 2014, and we have received very positive feedback from the intermediary market, which has taken to the concept really well. In fact, intermediaries have been at the forefront of driving our record sales this year.
What we need to consider is that with the rise of comparison sites, more and more consumers are price savvy these days and willing to research and shop around. This has meant that intermediaries, particularly those who source their leads online, and a large and growing proportion do, are compelled to recommend inSpire.
In terms of policy benefits, intermediaries have also told us that inSpire ticks all of the right boxes. Unlike some other low-cost plans, we haven't sacrificed benefits to hit certain pricing points, it still offers a full range of in-, day- and out-patient benefits. I think this has been another reason for its success. Often with low-cost plans, the compromise is simply too much for customers to take. Or the adviser doesn't feel confident enough to recommend it. But with inSpire, the only issue is whether they have a Spire hospital nearby. So we have achieved a good balance, and this is reflected in its increasing popularity.
FM: And you're now rolling this out to the SME audience. Why have you taken this decision?
SB: There are two main reasons: first, demand from intermediaries. As with many of the services we offer, we always ask, ‘What does the market want?' The clear answer was an SME version of inSpire. So we are proud to have launched it earlier this year. We also see it as natural progression. Within the company, we have well over 50 years' experience of the SME market so were well placed to move into this sector.
We also have a strong foundation of individual sales, our portfolio is stable and healthy, and we are hitting our desired retention rates. So for us, it was just a natural move to go into SMEs.
However, we are keen to take things step by step. We are looking for longevity, so we are controlling the growth and ensuring we manage the portfolio effectively.
FM: I want to talk about April UK's growth story generally. It came into the market in 1997. What have been the factors behind the company's growth and success to date?
SB: The company was established in 1997 as a direct selling company. And over the years, it became apparent that relying on this type of distribution would not help us deliver our growth plans. Regulatory pressures and changing buying trends were working against us. So in 2012 we took the decision to enter the intermediary market.
I think there are many reasons why we are succeeding (I don't like to say succeeded because we can always do more!). For me, a key factor has been our focus on delivering a high standard of customer services to our intermediaries.
Our aim is to be ‘the best insurer to do business with'. To achieve this, we have gone back to basics and looked to offer a truly accountable and personal service. I'm talking about simple things such as having all our calls answered within three rings by a real person.
We don't use answer phone systems during office hours. I can't stand those systems. I think the human touch is really important. Also having accountable and reliable staff, who are able to build trust with the intermediaries that they speak to and deliver what they say they will.
I always say, the people we employ are our most important asset: from those who answer the phone and process business, to those in our finance team, to those who are public facing. It isn't just about me or the senior managers. We are all in it together and everyone in the company has an important role to play. If any part of the chain falls, then we all fall. This is an ethos I always preach.
FM: And where do you see yourself in the PMI and protection markets: a small player, or one that can compete with the likes of Aviva?
SB: Both, I think! We are only three years into our intermediary journey, so our portfolio is relatively small, that's no secret. But it doesn't mean that we can't compete against the established companies.
Looking at individual PMI, where we have concentrated much of our efforts so far, when we speak with our intermediaries, we are competing effectively against the bigger providers and getting a good share of business. Our individual PMI proposition is stacking up well, and we are proud of the service we deliver. But for us that is only the starting point.
