BUPA has introduced disclosure for intermediaries selling corporate PMI.
Future large corporate PMI premiums will be quoted net, allowing the customer and intermediary to determine the appropriate level of cover.
Steve Flanagan, sales director at BUPA, explained that the changes had been introduced for a number of reasons including requests from both clients and brokers to quote on a net basis. He added: “Much of the financial service industry uses disclosure so we felt that we should follow suit.”
Flanagan admitted that the intermediary reaction had been mixed. “Some reactions have been very favourable,” he said. “But others are deeply concerned.”
Intermediary Stephen Walker of Brighton-based Medical Insurance Services, is concerned. He commented: “I should think it will knock intermediary sales on the head for that side of the business. If you run a two tier system then brokers are not going to respond well.”
He added: “If brokers have to add a fee on to a clients premium, customers will say `I’ll go straight to BUPA instead so I don’t have to pay the fee’.”
But Flanagan feels that the long term effect on intermediaries will be positive. “It gives intermediaries the opportunity to bill clients for whatever value the intermediary or client feels should be put into the equation,” he said.
Walker was perplexed by BUPA’s attitude: “For the past two years BUPA has thrown money at the intermediary sector and told us we are valuable. Now all that seems to have gone by the board.”
Additional changes to intermediary commission structures sees the initial commission rate for individual schemes reduced from 35 per cent to 25 per cent.
Flat fees have been introduced on small group business. From September 1, 1999, brokers who write the Premier Network, Premier Cover or Premier Plus products will receive a flat fee for groups of nine or fewer. For example, an intermediary selling a group scheme with between five and seven members would receive a flat fee of £490, with a renewal fee of £175.