As more employees expect PMI as a standard benefit rather than a luxurious extra, companies are viewing it as an essential product to attract and retain staff. Gary Noble explains
There is little doubt that private medical insurance (PMI), as a product, is increasingly seen as essential rather than desirable. This is especially evident among companies wanting to attract and retain top quality staff. In addition, employers appreciate that the wellbeing of their staff is key to productivity. Therefore they are taking an active role in maintaining the health of staff and seeking the benefits to support this. Employees have a favourable view of PMI and many place significant value on its provision as a benefit: in a survey conducted by Employment Today they identified it as their third most important benefit.
Expert advice
Recent statistics from the Association of British Insurers show that the number of people covered by PMI rose by 2.13% between 2006 and 2007 (from 5,879,000 to 6,004,000). As well as opportunities arising from a growing market, providers are more competitive than ever before in cost and benefits offered. The economic climate is also driving people to review expenditure and intermediaries are well placed to assist people with an objective review of their healthcare needs. Corporate clients, as well as individuals, are appreciating that utilising the skills and knowledge of specialist healthcare advisers can provide additional employee benefits as well as save them time and money. Indeed, insurance guides recommend using independent intermediaries.
There are a significant number of small business owners, without the support of a human resources department, who are unaware of the availability and cost of employee benefit packages. Intermediaries therefore have an opportunity to raise awareness and to support small businesses in sourcing the products that best meet the needs of them and their staff.
Intermediaries can also support clients who are finding it difficult to access NHS services, something particularly relevant with regard to dental care. According to Science Daily, there has been a significant decline in the number of adults in England registered with an NHS dentist, from 23 million in 1994 to 17 million in 2003/4. Specialist healthcare advisers are able to bridge that gap by sourcing cash plans, dental plans or PMI modules to meet needs.
There are geographic opportunities too. The majority of providers vary their prices depending on post codes, due predominantly to the higher costs associated with the provision of private hospitals. This does mean, though, that specific locations offer greater flexibility on pricing to potential clients. Applying resources within these areas makes good business sense for the specialist intermediary and insurer as well.
Corporate clients and individuals who already have PMI need to review their policy and requirements each year. Given the ever changing range of products and staff profiles, a specialist healthcare adviser is able to review customer requirements and source the products that best meet their needs.
Healthcare advisers in today's market need to be 'specialists'. Providers are regularly launching new and innovative products, producing a need for ongoing training so they can keep abreast of what is available. The client can be confident that the adviser has up to date knowledge and expertise. It is, however, a 'whole market' approach that enables a comprehensive review of products to take place. Being tied to a particular provider may offer benefits in relation to favourable terms between insurers and intermediaries but it limits the options and products available to clients at the point-of-sale and at renewal. In today's rapidly moving market this could be a costly client exercise.
Additionally, in terms of evidencing the regulatory requirements of Treating Customers Fairly, the 'whole market' approach has its advantages. By approaching a panel of providers rather than just one, advisers have a more comprehensive view of available products. When it comes to documenting 'fact-find' and 'suitability', this approach is key to evidencing that clients have been provided with bespoke healthcare propositions that best meet their needs.
New policies are constantly being developed and old policies enhanced. Modular products offered by providers present an opportunity to increase benefits or contain costs. The number of clients with legacy products that are not modular and lack flexibility is surprising. Specialist independent healthcare advisers are able to review clients' needs and source the most appropriate products. It is at this point that the benefit of a whole market approach is clear.
Keeping options open
There can often be more than one option for a client as during the initial fact-finding stage, the majority will state that they want to maintain the benefits offered to their staff. But this view can often change when there is a greater understanding of what is available. For example, certain options can reduce renewal premiums and others may include additional benefits at no extra cost.
There are also products on the market that work in harmony with the NHS, which can be attractive to some clients as many corporate firms and individuals like to make use of their local public services whenever possible. It is the independent intermediaries who have the opportunity to educate clients on the range of products available, as well as provide value for money services.
Having the option to be able to deal with more than one enquiry from a prospective client, across a range of insurance products, has great advantages too. Not only does it allow intermediaries to negotiate the best option for clients across multiple products such as general insurance, pensions and life insurance; it also helps with the retention of the insurance portfolio.
It is also significant that the market as a whole is moving away from PMI as a stand-alone product to one part of 'health and wellbeing'. For example, providers are now offering employee welfare packages that include occupational health, health-screening, absence rehabilitation and employee assistance programmes.
This holistic approach by a small number of providers helps employers to consolidate their resources rather than using a different provider for each benefit. The immediate advantage is the reduction of fixed costs and administration. Providing an employee welfare package sends a clear message to employees that the firm values and cares about its staff, which in turn generates positive brand values for the employer. This structured approach enables intermediaries to spell out the benefits clearly to prospective clients.
Something for everyone
Without doubt there has been a surge in demand for tailored healthcare and wellbeing products and services, partly due to greater awareness of the flexibility and affordability of PMI. More than ever before, PMI is becoming a necessity, not a luxury. It is the responsibility of independent advisers with access to best-of-breed products to offer individuals and corporate clients, of all sizes, clarity and choice. This is key to unlocking the market potential for insurers and advisers, and to ensuring that PMI is a top priority for individuals wishing to safeguard their most precious asset - their health.
- Gary Noble is managing director at Chartwell Healthcare.
