In recent years, the individual PMI market has seen flat growth. How will the market develop to combat this and where is it going next?
Brian Walters, Regency Health
The individual PMI market is nothing if not competitive. Bupa has just returned to the broker channel with a strong offering, Simplyhealth has recently launched a new plan, and April UK has established itself with a keenly priced product. With at least 10 viable insurers, there is ample opportunity for independent intermediaries to demonstrate their value to clients.
Claims sensitivity remains a significant point of differentiation. The market is divided between insurers that operate no-claims discounts, such as AXA PPP and PruHealth, and those that have nailed their colours to the mast of pure community rating, such as Exeter Family Friendly and WPA.
In theory, no-claims discounts make sense: claimants will often stand more of an increase, and we need to reward non-claimers to keep them on the books. In practice, the no-claims discount tends to be a blunt instrument, penalising large and small claims indiscriminately.
Aviva has gone some way toward addressing this problem, with no-claims discount protection and a £250 ‘buffer' before claims start to affect the discount. And Simplyhealth's new no-claims discount is particularly innovative, with the loss of discount linked to the value of claims.
As premiums continue to rise at an unsustainable rate, we need to find the right balance between penalising claimers and incentivising non-claimers to remain insured. I'm not convinced that the answer lies in pure community rating, but neither does it lie in no-claims discounts that effectively price people out of the market at a time when they need our product most.
Doug Wright, Aviva
The challenge for insurers is how can you bring out a level of benefits that manages the cost at a more affordable premium level? I don't think any of us have really cracked that.
Every time we do customer research, we find people want full PMI and do not
want to make down-trade options around only covering certain conditions or diagnostics or consultations.
However, there is only so much you can do to bring the premiums down. We try to do that by putting in place excesses or outpatient limits. But to customers, it often feels like you are taking away benefits to bring it down to a different price point.
We have launched products that are only around the diagnostic stage, for instance, and the take-up was relatively low.
We always find customers' number one worry about their health is cancer, so they always want extensive cancer coverage. The market has offered various options in the past, such as plans that cover only cancer, but there has been limited appetite for those.
I don't know what the future brings for the NHS as the budget continually gets challenged. Typical surgical interventions people expect to have may not be available so readily. People might like a product integrated into what the NHS might not provide in future. But at the moment, what you can get with PMI is also provided by the NHS, so it is a very strong competitor. If that situation changes in the future, there might be an NHS gap-type product.
