While demand for private health cover may be stabilising overall, ‘very difficult times' are predicted for individual policies. Nicolas Culley finds innovation and customer service are key in fighting the channel's decline.
Laing & Buisson's annual health cover report shows demand for private health cover is stabilising. But it is not the good news story it seems for individual policies. Company benefits have been driving modest yet positive market growth while individual PMI continues to track some very vulnerable trends.
As the typically small, specialist healthcare advisers tussle with the difficult market, strong consolidation among intermediaries has been predicted; and there are reports the IFAs are a significant drivers of PMI sales over the specialists.
According to Laing & Buisson's annual Health Cover UK Market Report 2012, the number of individual paid policies decreased by 4.2% in 2011.
It follows similar strong falls of 4.6% and 3.7% in 2010 and 2009 respectively, and moved under 1m policies for the first time in recent times.
Meanwhile, company paid medical cover policies showed sure signs of recovery with an increase of 1.2% last year after falls of 3.3% and 4.7% in 2010 and 2009 respectively.
Bupa has reported a decline of 0.2%. Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, said these were "very difficult times" as the market continued to decline.
She said: "We achieved that small decline largely due to retention of existing client business. Quality healthcare needs to be more cost effective. We have a good NHS that everybody uses but nobody in the UK really knows about healthcare and its costs.
"It seems that if it is more expensive then it must be better but that simply does not follow through. It is important people receive evidence-based care. It is a fundamental thing that needs to happen."
Cheap polices do not deliver
Macdonald added that there were cheap policies in the market to combat cost but they were not very good. She said people wanted breadth of cover and the solution was not about bringing out new products.
"There are hundreds of products available. The innovation needs to reform the supply side of the market and it is about how insurers are treating their customers," she said.
Bupa has reported a steep increase in the cost of trading generally. It said lead generation and online channels particularly had been significantly ahead of inflation. Macdonald said the only way through for insurers was to be as lean as they can be. That included, she added, controlling operation costs and spending sensibly.
