Jelf has warned that the private health insurance and employee benefits sector will be "no place for the faint hearted" next year.
The employee benefits consultancy predicted more insurers will follow Bupa in using open referrals and expects a regulatory investigation into market remuneration practices.
It also noted that the NHS reforms may drive some product innovation, but feared some of the new offerings may play on concerns surrounding the reforms.
Chief among the concerns raised by the brokerage will be its expectation that private medical insurance (PMI) remuneration will be investigated.
‘Towards the end of 2012 and into 2013 we predict that investigations into level commissions for PMI will gather pace and will result in possible FSA or equivalent enquiries,' it said.
‘Current market trends involving disputable practices (e.g. commission rebates and churned business) can only result in lower margins for all concerned through non-sustainable premiums.'
And Jelf added that the increased use of open referrals for corporate business was likely.
‘Bupa has already announced these measures (effective from January 2012) on the basis of improving quality and outcomes of treatment but clearly there is a commercial issue here too,' it continued.
‘We expect smaller providers to follow suit which could lead to a major change in how private healthcare is procured from the patient perspective going forwards.'
Another warning suggested the increased cost of pensions being forced onto employers will force them to review all the benefits they offer which may have a detrimental impact on the provision of PMI.
However, this could prove a boon to more cost-effective options such as cash plans.
Overall, it expects critical mass to be key in the market with continued consolidation of both insurers and intermediaries and as a result the number of specialist intermediaries involved in healthcare insurance may decline.
Wayne Pontin, director of Jelf Employee Benefits, concluded: "The economic uncertainty in the UK will have wide-reaching implications and affect many, if not most, aspects of the healthcare industry from a top-down provider point of view and at individual patient level as well.
"The continued squeeze on both UK Plc and SMEs means that where companies are not able to provide salary increases they should look to provide enhanced employee benefit packages instead in order to bridge the gap between salaries and price inflation.
"However, the reality of investing in these sustainable benefit strategies and communication programmes may be too much for most employers to stomach.
"Similar to the situation the pensions industry has been in this year, with NHS reforms imminent, the healthcare and benefits industries will be no place for the faint hearted in 2012," he added.
