Bupa has been the latest to warn about the nearing ‘affordability crunch' in the private medical insurance market as premiums continue to rise. What genuine, clean slate innovation would you like to see in PMI - and how possible will real innovation be?
Brian Walters, principal, Regency Health
Year-on-year increases of 10 to 15% are simply not sustainable, and insurers and brokers alike are acutely aware of this. There is always talk of innovation in the PMI market but it is difficult to innovate without fundamentally changing the product. Passport2Health, for example, is genuinely innovative and a great concept, but it will not be for everyone.
Some of the more subtle innovations are worthy of note. PruHealth's Local hospital list allows policyholders with listed hospitals nearby to save on their premiums without otherwise compromising on their cover. WPA's approach to advanced cancer drugs and dovetailing with the NHS is another smart idea because such claims are low in incidence and high in cost.
Bupa's Open Referral initiative has drawn criticism but is not without merit. It still offers a degree of choice and provides the policyholder with the reassurance they will not be shortfalled. If it also translates into significantly cheaper premiums, I would venture to say many consumers would accept the compromise.
Growth in PMI is of course inhibited by the availability of a free alternative. Some providers have introduced plans where the policyholder can take a lump sum instead of private treatment, but these products do not provide the safety net of traditional PMI with direct claims settlement.
I wonder if a higher NHS cash benefit on a traditional product - say, 50% of the private treatment costs - would incentivise policyholders to use the NHS. Any savings in claims costs could then be used to mitigate the annual increase.
