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The personal touch

The future of the individual private medical insurance market may hinge on whether individual products are perceived as being less competitive than group PMI.

There are many factors that have impacted on the individual PMI market. Getting cover within a group plan is invariably cheaper for the individual and may even be free if it is offered as an employee perk.

The challenge for the market is that not every person is entitled to PMI through the workplace. Not all these individuals are rushing off to find cover for themselves so there is a huge swathe of the population not covered privately for its healthcare needs.

The main concerns for providers of individual PMI surround costs, claims and product development.

Axa PPP Healthcare head of intermediary development Nye Jones says: “Quality and value remain key issues for the personal health insurance market. To be fair, insurers have been striving to address the issue of increasing claim costs.”

Jones says FSA regulation of the protection market from January will give opportunities for IFAs to develop a more complete “cash and care” service that takes into account their clients’ well-being as well as wealth creation and management. He predicts that the industry is likely to see a marrying of products from the general insurance and life/protection sectors.

“The new environment encourages providers to create products that better meet the needs of key distributors and their clients by bridging the gap between the traditional health and protection markets,” says Jones.

He believes the market for personal business will continue to be rewarding both for innovative providers and for intermediaries who are prepared to take a more holistic approach to meeting their clients’ needs.

Standard Life Healthcare head of intermediary sales Claire Ginnelly also thinks the individual market presents opportunities for providers. She says: “We are still keen to develop this market and we have seen an increase in the amount of individual business we have written through intermediaries this year compared with the same period last year.”

Standard Life Healthcare has picked up business largely due to the attractions of its Switch policy, which offers savings to policyholders with other insurers who have seen rises in their premiums.

Providing value that clients can really appreciate and products attractive to their pockets and lifestyles will continue to be the challenge for providers wanting to entice intermediaries to take their products out into the market.

The market is certainly not going to get a break from the competition presented by the group market, something felt as much by health cash plan providers, despite the volumes being achieved here in the group market.

SimplyHealth group head of PR and communications Jeremy Chadwick says: “Inevitably, group PMI remains and will probably continue to remain more competitive than individual PMI, especially when PMI continues to be such a desired corporate benefit to have. In fact, a recent survey carried out by HSA found that, after pensions, PMI was the benefit most wanted by the employer.

“On top of this, group schemes often have more competitive premiums as they are generally not individually underwritten and have a greater amount of negotiating power.”

Intermediaries would be forgiven for giving up on individual PMI, especially given the positive messages being pushed out regarding the increase in the Government funding going into the NHS.

However, this need not be a threat to the private market. The jury is still out regarding public confidence that the increased funding has been money well spent, according to Jones.

Only a small proportion of IFAs (7 per cent) and medical insurance specialists (11 per cent) believe increased NHS funding will adversely affect their health insurance business in the coming year, according to a survey by Axa PPP Healthcare. Most practitioners feel business will stay the same (59 per cent of IFAs and 58 per cent specialists) or increase (18 per cent of IFAs and 21 per cent of specialists).

Jones says: “When it comes to healthcare provision, the increased capacity in healthcare facilities arising from new Government spending on NHS treatment centres (many owned and operated by foreign companies) seems to be spurring UK-based providers into competitive mode and should in turn have a beneficial knock-on effect which results in lower costs for insurers and their customers.”

Ginnelly sees what she describes as “the Government attack on waiting lists through increased funding” as an opportunity to show that PMI is no longer just a no-waiting-list product.

She says: “Health promotion, absence management and a general focus on keeping healthy are all key parts of the PMI proposition and this fits well with a better funded NHS looking to achieve the same things. Increased funding has also increased the amount of public-private co-operation, especially on the provider side, helping us communicate the message that PMI is not a product set up to oppose the NHS.”

So far, no matter how much money the Government has spent on the NHS, the problem of long waiting lists is far from over. WPA communications director Charlie MacEwan says: “I am told that getting the queues to six months will be easy but under that will be difficult. PMI and self-pay give people choice.”

So long as there is a queue, there will be demand for PMI

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