An easier way

With NHS waiting lists getting longer and the importance of private healthcare becoming ever higher, more and more companies are adding healthcare to their list of employee benefits.

For many, ensuring their employment package includes private medical insurance (PMI) definitely helps them retain staff. At the same time, consumers are becoming more aware of the benefits afforded by PMI and are more prepared to take responsibility for their own medical needs by insuring themselves.

But intermediaries are often not so keen to tap this market due to the amount of leg work needed to get pricing, information and secure the deal. The time spent getting the right insurance for a customer against the commission earned often means it is not worth their while. Fortunately technology can speed up the process.

Getting information

The first problem that intermediaries face is gathering PMI product information. With a large number of companies and policies to choose from, keeping abreast of developments can be time consuming.

PMI companies often unnecessarily guard benefit details and costs, as they attempt to stay ahead of the field. As a result, an intermediary has to contact each insurer every time they want a quote.

The Association of British Insurers (ABI) guidelines require an intermediary to compare products on an agreed 14 'core' benefits. As each product benefit has the potential for several limitations according to circumstances, making precise comparisons and offering the client understandable and clear information often introduces significant challenges to an adviser who does not specialise in PMI. In addition, the total number of benefits available under plans from insurers number around 50 and it is often this level of detail that is required by the intermediary in order for their client to make an informed choice.

Regardless of regulation for individual policy sales, the challenge that faces an intermediary is presenting product information to the business or individual with clarity. It is a matter of not only presenting what a company has (something providers do well), but also what it does not have (which the company may not be so forthcoming about). This has always been the 'added value' of the intermediary, deciphering and comparing benefits, simplifying product data and presenting the customer with a meaningful comparisons document.

Collecting and collating all of this evidence takes time and therefore money. In the past, a lack of technology for intermediaries to obtain quotes meant this was largely a manual process performed by telephone, fax and mail. Consequently, the customer service and speed of response provided by the intermediary is often directly linked to that of the insurer.

The proposal form, product information and necessary fact sheets are all needed to complete a compliant sale. All this needs to be distributed regularly by providers and stored by intermediaries. This can be costly for both intermediaries and insurers, particularly when documentation changes.

These numerous barriers have resulted in a polarised market of around 350 PMI specialists, with in excess of 3,000 intermediaries selling small volumes often on an 'accommodation only' basis and sometimes at a loss. For many intermediaries, actively selling PMI is simply not profitable enough and they ignore this growing market.

Various technological developments have made life easier for the intermediary and technology has the potential to increase efficiency and allow more intermediaries to target PMI as part of their insurance offerings.

Compact disc-based rating systems, usually sent out by insurers, can greatly cut down on the time and cost of obtaining quotations from individual carriers. In some cases the system simply asks appropriate rating questions and processes the quote accordingly.

While an advantage over faxing through a quote and awaiting a response, this method is not without its restrictions. For a start, the insurer has to reissue a CD every time rating or product information changes and in today's world this can occur on a regular basis. This incurs cost for the insurer. Additionally, if an intermediary wants a comparison quote and all insurers were to provide similar CD ROM-based data, CDs would be needed for all insurers and the risk data entered in to each to obtain quotations. This is costly to the intermediary and does not solve their problem of getting quotes quickly, let alone the requirement for offering clients an accurate and clear comparison of benefits to accompany a list of prices.

Using the web

Most companies are beginning to realise the web's potential to distribute information and many progressive insurers now have a website to offer quotations and product data. These are utilised with varying degrees of success. Some act just as a shop front for the insurer ' 'brochure-wear' offering information, but little dynamic rating and obviously no comparisons. More effective sites include instant quotations, downloadable documents and quick, efficient communication with the company via email.

These websites go some way in tackling the problem of accessing regularly updated information swiftly, however locating the sites for each insurer, repeatedly inputting data and still having to do the comparative detective work, limits advisers' chances of long term success. It may save the insurers money as a result of not doing so many manual quotes, but it is questionable whether it really helps the intermediary.

As a result, some intermediaries have taken their own steps to increase their efficiency. Primitively this may consist of a paper rating sheet that contains information from a number of insurers they have cobbled together themselves. Quotations become quicker, but it takes time to compile each month. This idea has been taken further with the use of spreadsheets or databases and some limited automation, perhaps with the integration with a back office record keeping system. However, this is costly to maintain, and so hardly ideal.

New portals

Portals, meanwhile, attempt to collect the product information and pricing for the advisers, allowing them to enter client-specific risk data and obtain a premium or premium comparison for a range of insurers instantly. Some systems provide access to full product benefit details (in an ABI compliant manner where necessary), demystifying the complexities of product comparison and selection. By providing automated client reports to augment the detailed product data, systems allow intermediaries, experts or otherwise, to quote instantly, compare rapidly and make recommendations to customers with confidence quickly. A good system should be able to compare over 100 policies and allow completion of a sale online in a fraction of the time taken to complete the sale manually.

The positive response to these products demonstrates it is possible for any adviser to sell PMI or cash plans efficiently and profitably. As a result, many companies are now looking to embed this technology into their own web systems in what is known as white labelling.

The provider supplies all the data and pricing for the website, but the host company maintains site branding. This technique has been used successfully in many areas. An increasing number of insurers, intermediaries and retailers are looking to provide this functionality rather than having to develop their own systems.

As employers seek to extend the range of employee benefits to retain staff, PMI is often seen as an essential part of their armoury. An integrated website that an employee can use in the work place means cover can be checked online without the need to call the insurer or a human resources department. The advent of employee intranet creates a fantastic option for insurers and software companies to provide the technology to allow policy servicing online. This accessibility reduces cost to the employer and insurer and in this environment, is more effective than an online pricing solution. Common in some sectors, expect to see this for PMI in the future.

Digital television and WAP phones are set to broaden the use of the internet, and as technologies become more pervasive, consumers will be more likely to buy online too.

WAP is an encoding system to enable a mobile phone to receive certain internet information. Digital television with its increased band width and speed of data transmission opens up the opportunity for more services to be available through the screen. While no-one is selling PMI via digital television or WAP phones yet, systems are available that allow this to happen. The increasing opportunity for PMI sales and for policy servicing is significant and it will pervade these technologies.

All research indicates that when the public purchase financial services products, they consider their highest requirements to be choice and the ability to demonstrate value for money. The market for sales of PMI and associated products, such as cash plans, is growing and should not be ignored by intermediaries any longer ' whether they use traditional methods of obtaining product information, or more sophisticated ones. The fact remains, however, if the intermediary wants to exploit the market efficiently and profitably in the future, they will need to use the technology to overcome some current barriers to selling healthcare products.

Technology helps by making quotations and comparisons more efficient, reducing cost to intermediary and insurer alike and helping to provide enhanced customer service. Additionally, if PMI goes the way of other insurance classes, the public's perception of an intermediary will depend more and more on their ability to master these technologies and provide a slick, rapid service. Those that employ the technology well will stay ahead of the game while the remainder may be waiting two weeks for an insurer to respond to a quotation request. Rest assured, the customer of the future will not.