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Private enterprise

Following the introduction of Standard Life Healthcare&#39s private medical insurance policy, Choices, we asked our broker panel to compare it with two other schemes – BupaCare from Bupa and Fair + Square from Norwich Union.

Commenting on the market suitability of the three schemes, Campbell says: “Standard Life Healthcare&#39s Choices is unlikely to be marketed in the traditional fashion. The policy has a much higher excess than traditional policies – 1,000, 2,000 or 5,000. Therefore, it is for clients who are prepared to fund a significant part of treatment costs in return for comprehensive benefits at a lower premium.”

Dazeley says: “The Standard Life plan compares favourably with the other two plans in that it does not appear to exclude any consultation or treatment although it offers excesses. The other plans seem to create exclusions which, though pointed out at time of sale, may be forgotten later and then create problems at the point of claim.”

Tranter comments: “Standard Life&#39s plan offers fairly wide cover at a low cost until you fall ill, whereupon you will have to pay between 1,000 and 5,000 for your treatment. I am not convinced that this proposition will sell. The bottom end of the market may be attracted by the low premiums but will not have up to 5,000 lying around to pay for treatment. The top end of the market arguably does not need cheap premiums so I am not sure who will buy this.

“Bupa&#39s plan is a straightforward comprehensive product while Norwich Union&#39s is a good concept, allowing clients to use private or public treatments as they see fit, both salving their political consciences (if they have one) and saving money in the process if they go down the latter route.”

Connelly says: “The three plans really take different approaches. BupaCare is the classic approach. It is reasonably comprehensive, gives excellent hospital choice and offers annual voluntary excesses ranging between 100 and 500 per person. Norwich Union&#39s Fair + Square again offers comprehensive benefits but has a very restricted hospital choice. Its unique selling point is the 250 per night or day if the policyholder elects to take NHS treatment rather than being admitted as a private patient.

“Standard Life&#39s Choices again offers comprehensive benefits and wide hospital choice but imposes larger voluntary excesses per claim of 1,000, 2,000 or 5,000. The plans therefore serve the same broad market but occupy different sectors of it.”

Comparing the structure and flexibility of the Standard Life Healthcare product with the other two plans, Tranter says: “The three are structured quite differently. The unique selling point of the Standard Life Healthcare plan is a lot of cover at a very low cost with high excesses. There is flexibility to add on alternative medicine and/or access to the treatment information service. The Bupa plan is a good, honest, straightforward, comprehensive plan – not particularly flexible but a good product nevertheless. The Norwich Union plan offers flexibility and the choice of going private or public.”

Connelly says: “The structure of the Standard Life Healthcare plan is different. It is generally believed that only an average of one in five GP referrals leads to hospital admission. Thus, the policy is effectively disaster cover, especially if one of the higher options is chosen. It is, therefore, the least flexible of the policies although it may be felt that the lower premiums make up for this.

“Once the excess is passed, the policy offers the most generous benefits, other than psychiatric. However, the excess is per claim, unlike the Norwich Union and Bupa plans, which are both per person, per policy, per year.”

Campbell says: “They are all designed to have comprehensive benefits. The main flexibility is only on the level of excess. One particular advantage of the Choices policy for clients who are already with Standard Life Healthcare is that they may be able to transfer to it from an equivalent traditional policy with no new underwriting. With Bupa and Norwich Union, clients generally will be fully underwritten, even if they already have a policy with the same insurer.”

Assessing the useful features of the Standard Life Healthcare product compared with the other plans, Dazeley says: “There are no real strong points with the exception of the advantage that Standard Life Healthcare can reduce premiums by accepting excesses rather than by limiting cover.”

Campbell is more positive. He says: “Choices includes a treatment information service which is intended to help people with claims, particularly to find fixed-price treatment at private hospitals. This is a new service in addition to its standard GP advice line. It also has a good hospital list, which is similar to Bupa and more extensive than Norwich Union, and does not have the fees limit which could be imposed by Bupa if a client does not use a Bupa-approved facility or consultant.”

Connelly says: “The combination of excellent benefits, wide hospital choice and the low cost makes Choices appealing to those seeking cover at low cost. It must also gain by carrying the Standard Life name. The treatment information service could also be useful, first to offer a valuable service for those who choose a higher excess and also to offer them some value when unable to claim from the policy.”

Turning to the disadvantages of Choices compared with the other plans, Tranter says: “Many will see the large excesses as a drawback although, as they say, you don&#39t get owt for nowt. If people want cheap premiums, they should expect a payback in the form of an excess.”

Campbell also highlights the excess, saying: “For a client wishing to have treatment, the most obvious drawback is the high excess. With Choices, the premium will probably go up each year, the same for Norwich Union, unlike Bupa where premiums are fixed for a specific term of five or 10 years.

“With high excesses, the definition of when a client is liable to pay the excess is very important. Excesses are typically per person per policy year, which applies to the Bupa and Norwich Union policies. The Choices excess is payable per claim. Consequently, the excess could be payable more than once in the same policy year.”

Commenting on the reputations of the three companies, Connelly says: “Standard Life Healthcare, formerly known as Prime Health, has established a reputation for innovative products at reasonable cost. At times, services have slipped but the company has always been quick to address the problem.

“Norwich Union has displayed a willingness to innovate and now offers a very wide range of policies. Again, at times, customer service has not kept up but it is quick to recognise this and to take action. Bupa is the biggest PMI provider and has probably attracted more adverse comments than it deserves. It has blown hot and cold in its relations with IFAs but I sense a new willingness to develop this channel.”

Tranter says: “Standard Life Healthcare does not have a name in the market as it has only just changed its name from Prime Health, which had a good reputation. The group obviously feels the parent brand has greater name awareness.

“Bupa has over years had a poor reputation with IFAs but has pulled that around recently. Moreover, it has been the first insurer to introduce fixed-premium medical insurance, a welcome and innovative move. Norwich Union has always had good products and has just merged with CGU.”

Looking at the product literature, Dazeley says: “The Standard Life Healthcare literature is very good and the Norwich Union literature is reasonable. But the Bupa literature is too complicated in some areas and lacks detail in others.”

Connelly says: “Standard Life Healthcare has always produced clear, attractive and understandable literature and this is no exception. The hospital list is a model of clarity. Norwich Union, with its procession of staring eyes on the front cover, does not seem as easy to follow. One plus is the inclusion of the full policy wording which itself is very clear. It is essential that the hospital list is included bearing in mind the restricted number available on the policy.

“Bupa&#39s literature gives the least information. Four pages are taken up with photos that contribute nothing to helping the reader. Compared with Standard Life&#39s package, it seems drab and uninspiring.”

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