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Individual approach needed to boost PMI

Private medical insurance will only survive on an individual basis if IFAs and product providers make changes to their approach to the PMI market, according to a panel of experts.

The debate last week at the Association of Medical Insurance Intermediaries’ general meeting at the NEC in Birmingham saw overall agreement that the PMI market can survive despite a downturn in individual sales.

Although the overall PMI market has grown every year since 1970 to be worth nearly 300m a year, the number of policies written in the individual market fell by 3.1 million last year.

Axa PPP sales and marketing director Chris Horlick said although the market has reduced since 1997, premium income has still grown by 400m over the same period.

Although the Government is spending increasing amounts on the NHS, Horlick said the policy is set to fail and so there will still be an opportunity for IFAs to sell the product. He said: “However much money you throw at an ancient and bureaucratic system, it is not going to work. It systems, management and bureaucracy will fail.”

Horlick said there are two ways that IFAs can promote sales in PMI.

First, advisers need to begin targeting younger clients to come into the market.

Second, the IFA market and the product providers need to look at selling a far broader product by aligning PMI with protection products. He said: “It depends on whether the IFAs have the appetite to do this.”

Private Health Partnership director Chris Bye told delegates the problem in the PMI market is that consumers are confused by two radically different styles of product.
He said: “There are those products that are cheap and nasty and do not live up to clients’ expectations and those that are quality and expensive and do not live up to clients’ expectations.”

He said IFAs are struggling to sell individual PMI simply because it is too expensive and added that as well as a redefinition and simplification of terms such as “in-patient” and “out-patient”, premiums in relation to policy exclusions need to be looked at.

Bye said: “It is ludicrous that a man with an exclusion for a cardiac condition is expected to pay the same premium as someone who has not got any exclusions. Why not reduce the premiums?”

Patient Choice chief medical doctor Dr Thom Van Every agreed that products need to change and become more flexible but warned advisers and insurers to make a clear choice on who they targett. He said advisers need to make a choice as to whether they want clients from the traditional elite sector of the market or the affordable alternative sector.

Axa head of intermediary development Nye Jones says: “The personal protection market is changing and insurers need to respond more effectively through product innovation and integration to meet the needs of key distributors and their clients.”

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