Hospitalcare from Berkeley Alexander is a private medical insurance plan that features elements of critical-illness cover and healthcare cash plans.
Commenting on how the plan fits into the market, Carr says: “Overall, the plan offers reasonably comprehensive medical cover at a reasonable cost. It combines the benefits of private health insurance, critical-illness insurance, accidental death insurance and hospital cash benefits. It should fit in well in the current market.”
Jones thinks the plan sits midway between cash plans and low-cost health insurance. Lewis-May thinks it is suitable to provide short-term cover.
However, Tranter says: “I am not convinced that there is much of a demand among IFA clients for this product. The critical-illness benefit of £5,000 is not going to go far in changing someone's lifestyle. If there is a need for life cover, then it should apply on death by any cause, not just by accident. This leaves you with a cut-down PMI plan with a £15,000-a-year claim limit or a healthcare cash plan.”
Assessing the cover available on the plan, Carr says: “The limits for each claim and overall annual limits could prove to be restrictive but this is reflected in the cost of the plan. The brochure quotes up to £7,500 as being the cost of a hip replacement but the maximum payable under the policy is just £5,000.”
Lewis-May thinks the cover is poor. Tranter says the survival period of 28 days is higher than most critical-illness cover plans and the hospital cash benefit is not payable for the first three nights in hospital.
Jones says: “The amounts available in each section seem to be OK in most cases but looking at knee replacement, hysterectomy, heart and cancer, the limits are insufficient to cover all costs associated with treatment. This could leave the patient with significant bills that a more expensive policy would have covered.”
Considering the types of client for whom the plan is suitable, Tranter suggests: “Probably the bottom end of the market, where clients cannot afford PMI but can afford a little more than the cost of a healthcare cash plan.”
Jones says: “I would suggest offering this type of policy to individuals or the self-employed as having an element of cover rather than none.”
Carr thinks the plan would suit any client seeking cover for major illnesses and disabilities or who is concerned about the overall cost of cover.
Lewis-May suggests it is used in the short term pending the arrangement of a more comprehensive package.
The panel have differing views on the marketing opportunities the plan will provide. Carr says: “Many clients would like PMI but are put off by the high costs. I can see the plan being popular.”
Tranter says: “Probably its best use is as a direct marketing exercise. The likely rewards are hardly worth spending an hour going through and explaining, from an IFA's point of view.”
But Lewis-May believes there are few marketing opportunities, other than for expatriates and offshore returnees.
Analysing the plan's useful features and strong points, Tranter suggests: “The ability to provide a cash sum to have certain procedures carried out privately without worrying about NHS waiting lists. It is probably cheaper than PMI.”
Carr likes the monthly and annual costings, the inclusion of critical-illness cover and the payment of hospital cash benefit for stays in private hospitals.
Lewis-May says: “Simple documentation and the medical assistance package could be a help.” Jones thinks the low-cost critical-illness cover, death benefits and case management are plus points.
Turning to the disadvantages, Lewis-May says Berkeley Alexander is a little known insurance group. Carr suggests the list of illnesses and disabilities is too restrictive.
Tranter cites: “The lack of premium guarantees, the fact that death cover is applicable only to accidental death, critical-illness cover amounts may not be enough to finance lifestyle changes, the critical-illness deferred period is longer than that for most established critical-illness players, the exclusions, notably the pre-existing conditions exclusion, and the lack of reputation.”
Jones highlights the low maximum cover limits and automatic removal at age 65.
Asked what they think of Berkeley Alexander's reputation, the panel have mixed views. Carr thinks it is good.
Lewis-May thinks it is well respected but has little press coverage. Tranter says: “Berkeley Alexander is an established player in the accident, sickness, unemployment and redundancy market and does not have the financial clout or name awareness of a major insurer.”
Next, the panel assess which plans they see providing the main competition to hospitalCARE. Carr says: “It depends on the age of the client and difference in cost but any of the current popular plans from PPP Healthcare, Bupa and Norwich Union, for example.”
Jones cites Simply Health's plans and Bupa's work assured and high level cash plans. Lewis-May mentions Royal & Sun Alliance.
Tranter says: “As a hybrid product, there are few direct competitors. Pinnacle is active in this market. Many of the major PMI providers including BCWA have cash plans that could be seen as competition.”
Comparing the premium rates with similar plans, Tranter says the hybrid nature of the plan means it is hard to do direct comparisons. “It is cheaper than most PMI plans but, given the reduced benefits, you would expect that,” he says.
Carr says: “Premium rates are very competitive but cover is limited, as are the medical conditions that are covered.”
Only Tranter comments on the commission payable to IFAs. He says: “Commission is 25 per cent initial. This is very good for this type of product.”
Turning to the product literature, Lewis-May says: “It is suitable for mailing but is lacking in product detail.”
Carr says: “Everything, including the proposal form and direct-debit mandate, is set out clearly in one brochure. The brochure is well laid-out, easy to read and easy to understand.”
Summing up, Carr says: “If the range of medical conditions was not so tightly defined and if I did not have to face the daunting task of seeking far more expensive cover at age 65, I would seriously consider the plan for myself.
“Even so. I would almost certainly recommend the plan to clients.”
Jones says: “It is pleasing to see a company being innovative in the market and trying to offer a new style of cover. In my experience, schemes like this with limits can often cause more trouble in the event of high claims by making the patient pay any shortfalls. Being kicked out at 65 is a major disadvantage unless there is an alternative policy to go to without the need to declare medical history again.”
John B Carr, principal, John B Carr Financial Services,
Victor Lewis-May, managing director, Lewis May and Associates, Guy Jones, managing director, Berwick Devoil
Dale Tranter, research manager (protection & pensions), Misys