Wayne Pontin, chairman of the Association of Medical Insurers and Intermediaries (AMII), has confirmed he will be stepping down in April and has criticised the PMI industry's poor growth in his final speech.
Giving his final address as chairman at the 2014 AMII summit, Pontin asked: "Why are we going backwards, why is there nil growth?"
Pontin suggested two key areas where the industry could stem the decline in the proportion of the population with health insurance down to 10.6% compared to the 11% in the 1983.
Addressing intermediaries he said: "From the intermediary perspective, and this is true, whatever size you are and whichever sector you concentrate on, stop using commission kickbacks to win switch business.
"Add value and provide sound advice to enable sustainable solutions for your clients. Transferring from one insurer to another simply means the market will stagnate and eventually close to intermediated advice."
Pontin told providers: "From the provider perspective I would request that we look within. Examine your new business acquisition strategies. Insurance used to be quite a simple concept. Assess the risk, apply some market projections based on history and actuarial statistics and set a premium."
He said strategies which result in an escalation of price driven decisions and can also mean that the end user receives one or more quotes for what they perceive to be the same cover, leading to dual or sometimes triple pricing are "illogical."
He added: "If there was a clearer exchange of data and more transparency, this would not happen. I contend the insurers are driving a price sensitive model, particularly in the SME sector.
"In the consumer sector they are encouraging the growth of aggregators and comparison sites, dominated by price sensitivity, by agreeing quite large introductory commissions."
Pontin also said:"I would obviously concede that each intermediary will have variable new business acquisition costs and this therefore should be factored into initial commissions."
He concluded: "However, there is a very thin line which results in a tipping point in terms of growth and sustainability.
"If the initial commission is too high it could feasibly encourage churn at each and every renewal at the cost of growth."
Pontin also discussed common areas of concern including the Competition and Markets Authority's private healthcare final report being appealed before the Competition Appeal Tribunal, scheduled for 19 January 2015.
There will be an election to replace Pontin as chairman of AMII.
