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Product Matters

The decision by Western Provident to freeze the premiums on its flexible benefits scheme which is aimed at small corporate private medical insurance customers may come as a surprise to many coming as it is at a time when average premium increases are between 7 per cent and 15 per cent.

However, it is an immensely sensible decision and it is in response to two main trends.

These are the Government&#39s determination to cut waiting lists and create a cheaper and more efficient service in return for investing large sums of money into the health economy.

This may be motivated by politics but the main casualty of the increased efficiency is the private sector, as it is expected to result in less demand for private medical cover.

As waiting times fall, patients will start drifting back to the NHS.

The continuing trend of a decline in sales of individual PMI policies but an increase in corporate policies which receive big subsidies.

These changes – lower costs and shift to corporate policies – are putting pressure on costs and the traditional PMI business model. There is likely to be much more emphasis on prevention and health care as opposed to treatment.

To some extent, this has also been reflected by Western Provident&#39s decision to pick up on the issue of work-related stress and the effect that this is having on absence from work due to sickness. The company is including access to employee assistance helplines at no extra cost.

Anna Sofat is managing director of Destini Fiona Price

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