A 20 ft palm tree dominates the reception area of Permanent’s plush offices in Exeter. It stands on highly polished marble floors and is reflected in the glass windows that surround the main atrium. It is impressive to say the least.
The building is six years old but looks brand new. Purpose-built when the company relocated seven years ago, it suits the needs of an expanding business.
Originally called The Permanent Health and Sickness Company, the current shorter and snappier name epitomises Permanent’s core business: income protection. It also provides cover for life assurance, long term care and critical illness.
Having just celebrated its 40th birthday and a 17.5% growth last year, Permanent is firmly established as a leading market specialist. The company was established in 1958, but has roots going back to 1884, when a former parent company was one of the first to develop income protection.
Relocation benefits
Seven years ago the company relocated from London. The relocation was primarily a cost cutting exercise, but the benefits of living and working in the West Country are far reaching. Jeremy Evans, the firm’s IT manager elaborates: “It really is a nicer place to live. We have a far better workforce here who are more settled and more content. There is a lack of commuting and nothing like the same turnover of staff as London. At a time when IT resignation is at 15% in the industry, we have a rate of about 5%.”
Evans also believes that the convenience of having all 180 staff in the same building enables Permanent to give its best service. He gives the example of new product development, citing the ease of which an idea from the man at the top can be quickly and efficiently translated into new policy.
The man. in question is the newly-appointed managing director, Andrew Chapman. A mere 39 years old, Chapman has speedily risen through the company ranks.
He joined the original parent company, Medical Life and Sickness in 1981 as a sales manager and later became sales and marketing manager for the group. But when Permanent recently took a new direction, Chapman also turned a corner in his professional life.
Equitable Life – which has the assets of £19.1 billion – bought half of the company 18 months ago and secured the remaining portion a few months since. New management can often have significant consequences for the existing company but Permanent has no need to worry.
Permanent is in an enviable position: the financial backing of a major player in the insurance market and the space to make its own decisions. The takeover has led to increased independence and security, as well as new opportunities.
“I was general manager in charge of the operational side of the business. When the group split and Permanent became a company in its own right, we knew that to go forward we needed a figurehead and a dedicated manager,” he says.
A combination of hard work and being in the right place at the right time means that Chapman is now in a position to influence the business. The numbers of staff are rising and the company is investing heavily in technology.
Permanent’s emphasis is firmly on income protection, which forms the focus of the business. There are some 82,000 policies in force with premium income of £19 million a year. Staff are exceptionally proud of the innovative new product, Flexi Protector. Permanent promises to check the customer’s salary every year in order to maintain the original percentage of salary cover.
Benefit and premiums are automatically increased in line with the average earnings index if policy holders fail to respond to the check. The flexibility this brings is seen as a unique feature in existing income protection plans.
Chapman sees Permanent’s commitment to long term care as one of the most exciting challenges it faces. This policy is thought of as a hard sell with traditionally low levels of sales. Chapman is convinced that all this is set to change.
“Long term care won’t take off until the end of the year at least. But the market is almost limitless, there is so much potential. It will be a major growth area around the millennium and beyond,” he asserts.
The consensus in the industry seems to be that the market is dependent on government action. The findings of the Royal Commission at the end of the year will determine the future of long term care provision. Whatever the outcome, it is becoming clearer that the welfare state cannot cope.
Chapman has some forceful comments: “The Labour government is an interesting phenomenon. The Tories have been saying for 18 years that the government can not afford the NHS. Now Tony Blair is saying the same thing and it is not the normal Labour party line. It seems that if Tony Blair is saying it, then it must be true.”
Private health insurance is firmly on the political agenda. And the increased publicity can only be doing the insurance industry a lot of good. Chapman has a few ideas how to boost the industry even further.
Contract partnership
A logical answer would be to form a partnership between government and the private sector. “The customer could pay their long term care contract for two years and then the government picks up the cost. This would make it cheaper,” he says.
He also suggests a similar cost-reducing exercise aimed at cutting the price of premiums: tax relief for long term care. As one in four is likely to claim, the benefits from lower premiums appear self-evident.
Anything that makes cover cheaper and widely available is worth having.
The insurer is also a strong supporter of the IFA channel. Permanent is happy to provide intermediaries with branded sales support literature and provide suggested letter copy to facilitate direct mail campaigns.
Permanent’s staff are committed and the company is motivated and dynamic. But it is not all work and no play for Chapman and his employees. Permanent is one of the main sponsors of the local music and arts event, the Exeter Festival. This involvement is a crucial aspect of the company’s philosophy to put something back into the community.
They also liaise with the local council on the future of Exeter, actively seeking to improve the town where their staff live and work.
The emphasis on creating a genial working environment is everywhere in evidence at Permanent, from its business strategies to its commitment to staff. Employees can chill out in the gym or the sports hall or socialise in the restaurant or club. It is a caring company which has attracted the pick of the local workforce – and as its name suggests, one which is set to flourish indefinitely.