Fiona Murphy asks how the individual PMI market has fared over the past year and how it can combat lagging demand.
“However, low growth figures in the market as a whole would suggest that this hasn’t been too successful.”
For Brian Walters, principal of Regency Health, there have been two really significant developments in the individual sector of the PMI market.
He said: “Aviva introduced a number of subtle but effective changes to their Healthier Solutions product at the beginning of the year, while Simplyhealth have recently launched a semi-modular product called ‘Simply Personal Health’. This product has an innovative approach to the no-claims discount, where the loss of discount depends on the value of the claim.”
This seems to be the norm across the market as a whole, with small innovations tweaking existing policies instead of game-changing upgrades or going back to the drawing board for new products.
However, Priestley adds: “You could argue that some of the developments we’ve seen are restricting the value of the products. They’re restricting consultant or hospital choice or imposing large excesses.
“Equally the number of people who buy PMI do not claim and quite rightly might ask what am I getting back for my money? We feel there’s a big opportunity to encourage people to buy more PMI but in order to do that we feel product providers need to put much more value into the product and in a way that doesn’t rely on people having to claim.”
Adviser engagement
What about how the individual market engages with advisers, has this seen any major changes?
One development that has been announced this year, and that could do much to improve the relationship between intermediaries and insurers has been trade body AMII’s amendment to its constitution.
Although this had been the subject of market rumour for some time, the organisation confirmed in June that insurers Aviva, AXA PPP Healthcare, Bupa, Health Shield, CS Healthcare, Westfield Health, Simplyhealth and PruHealth were all at various stages of signing up to corporate membership.
Bupa had re-confirmed its commitment to the individual intermediary market earlier in the year. It had pulled out of this market citing challenging market conditions and commercial viability during the previous year, but clearly could not stay away.
The insurer also announced plans to offer commission to intermediaries on individual private medical insurance. It will be interesting to see how this re-entry into the market will fare over the next twelve months.
Meanwhile, in terms of adviser processes, Walters has identified a key trend that has impacted on his advice process.
“There have been a number of stories in the national press about fee guidelines (upper limits on what insurers will pay to surgeons and anesthetists) leading to raised awareness of this issue amongst consumers.
“We’ve always alerted clients to the possibility of shortfalls as part of our advisory process but there is a wide variation in what insurers will pay and this is something that we increasingly take into account when assessing the overall quality of a product.”
Jones uses an example from his own firm as to where he thinks advisers and provider relationships should be heading:
“Many insurers have been tweaking their already complex products to try and reposition themselves or widen their potential markets.
“We take a different view. Our business is led by the advisers we work with; we ask what they would change about what we do. Overwhelmingly, the response this year has been “more of the same please.”
“Advisers seem to value of open and consistent approach to products and service, an approach which has led to considerable growth over the last few years.
“We continue to develop ways for advisers to engage and interest their clients in PMI. This year we launched a new version of our iPad app to put customers in control of our Health Choices for Me plan. “The feedback from advisers has been really positive so far.”
Reviving the market?
So, how can insurers revive the market – are there any trends on the horizon with the potential to give the ailing market a much needed boost?
Jones says: “It’s a dynamic market in that insurers compete with one another, and in a sense we compete with the NHS; so the picture is constantly changing. What is slowly becoming clear and not just to those in the know is that the NHS can’t survive as it is without a massive increase in funding, an increase which simply isn’t going to happen. As a result, the public will need to reassess what they need and expect in terms of healthcare and whether PMI is the answer for them.
“For the industry, the key challenge is to be dynamic enough to reflect changing demand but do so in a way which develops the kind of trust and relationships that insurers need and consumers want. Simplicity and transparency are crucial to any successful business, but perhaps even more important in our sector.
“Equally, as an industry we need to move away from a pure battle on price. It is far better to encourage consumers to choose their products based on value and what’s right for them, rather than simply as a commodity.”
Meanwhile, the Competition Commission’s investigation into market distortions in the private healthcare market has revealed a great deal about how insurers have been operating within the PMI market.
The watchdog has called for greater transparency and putting the patient first. If this shift happens; public sentiment, premium costs and the customer journey could massively improve in both the individual and employer funded insurance markets. That’s of course if the recommendations made by the Commission are taken up and accepted as an industry standard.
This provides the potential for a clear chink of light and growth indeed, but aside from how hospital groups operate, it is up to the individual PMI market to change how they conduct business and how they target consumers.
