Bose says unless the competition on price eases it will have adverse effects on policy benefits.
He says: “We are running a risk of commoditising healthcare in the same was as home and motor insurance with growing pressure on price. This is not car insurance, it is a much richer and deeper product than that and if the price keeps coming down so will the benefits. It is not healthy.”
Bose says price can only be dropped so far by those insurers looking to attract or retain business without either making products commercially non-viable for the provider, or by reducing cover so much that it leaves the policyholder underinsured.
He adds: “We’re increasingly fighting over each others customers as the recession has driven more customers than usual to consider their renewal premiums and search for a better deal. Customers obviously look at their premiums and its natural for the IFA to focus on that aspect as well but I would suggest there’s a value element to the discussion.
“IFAs have a great role to play in reminding the client why PMI is important and why they need to protect their cover rather than remove it as an easy way of reducing their premium.”
Going forward Bose suggests that the industry use “simple mechanisms” to help control escalating costs, such as excesses or using different hospital lists.