Prime Health came from nowhere to become the UK’s fourth largest private medical insurer in the space of 10 years. An achievement which was largely due to Peter Dalby, whose vision and drive led to the company’s foundation and its rapid rise to success.
But the company now has a new leader in Mike Hall, who joined Prime Health in May 1997, and effectively fulfiled a managing director-in-waiting role until October 1998, when he took over the top job.
Dalby, who retired at that time, continues to have links with the company and acts as deputy chairman.
But while Hall plans to continue much of the innovative work which was put in place by Dalby, he is very much his own man, with his own ideas, and is clearly very much in charge of the company’s forward direction for the years ahead.
His confidence comes from a background which makes him ideal for his latest role. Previously he has been a director of 29 BUPA hospitals and before this has worked for the NHS.
He explains: “My background was really useful for this job. Through working for a private hospital chain I can understand the service our customers will receive, and having experienced the bureaucracy of the NHS can look at the way we run our operations.”
Prime Health continues to use BUPA hospitals for its policyholders, and, while the company does not have a dedicated network of hospitals, it does offer customers the option of using one. “Networks do help drive up quality and drive down cost, but we feel customers should always have a choice,” he says.
The company is part of insurance giant Standard Life, which, according to Hall, is a “hands off parent which lets us get on with running the business.” However, in the past year, just being part of the group has had a major influence on the business. Prime Health did offer critical illness, income protection and long term care, but stopped writing new business last October, largely because protection is already available through Standard Life. Private medical insurance is now the company’s sole focus, with cover offered direct to the public, through a direct sales force, as well as though a network of intermediaries.
The broker channel is seen as being increasingly important and this division is headed by Philip Wright.
However, with the PMI market largely static, Hall does not pretend his job is going to be easy. He describes the market as “very tough”.
Factors contributing to this include, not least, the fact that premiums tend to rise faster than inflation, a conundrum which has been caused primarily by advances in medical treatment.
And then there is the thorny subject of consultants’ fees. Some doctors are notorious for hiking up their fees which can impact heavily on premiums.
Hall remarks: “We do make sure we have meaning dialogue with hospital specialists on a regular basis.”
But if the PMI market is to take off, action must be taken and Hall says much could be done to improve matters. For a start, he is calling on providers to be less insular.
He says he would like other PMI insurers to start working together, and perhaps jointly to sponsor a nationwide and national advertising campaign, to promote the benefits of private cover. “After all, you have a Meat Marketing Board to promote the benefits of eating meat. As far as we are concerned, there is no coordinated effort to promote our cause.”
He believes this is important as he feels that image some people have of PMI can be outdated – and that some who held cover in the past do not realise how much it has changed. “People should start understanding how much more they are getting from their PMI policy now than they were 10 years ago,” he comments.
In particular, Hall says private hospitals have improved enormously. “In the past, these were often little more than glorified nursing homes. Now, there are few treatments including major surgery and MRI which are readily available in the private sector.”
One initiative he feels has made a difference to the future of the industry is the ABI working party. This was set up to prepare a response to the Office of Fair Trading’s criticisms of health insurance and brought together representatives of most of the leading insurers.
Representatives meet on a regular basis and Prime Health is represented by its public affairs manager, Caroline Southwood. Even though an official response has been made to the OFT, the representatives are continuing to meet, and Hall says this has been a major step forward in bringing the industry together.
But beyond communicating better between themselves, Hall says the industry must do more to communicate with the Government.
He says he is well aware that health secretary Frank Dobson is hostile to the private sector, but believes the view that private medicine is competing with the NHS is nonsense.
Instead, he feels the system is unfair to those who choose to go private. “There is currently no incentive to buy private healthcare, and it is effectively a double tax as people are already paying national insurance contributions and then if they buy health cover, they are also paying insurance premium tax.”
Hall points out that pensions and savings offer tax relief and would fail to be bought by many if they did not. “If the plan was to tax ISAs then they wouldn’t get off the ground. Yet the Government does not seem to realise if more people took out heath insurance it would ease pressure on the State.”
However, Hall feels consumers should also be selective about the provider they choose. He says Prime Health’s strengths include only offering fully reimbursable policies. This is where the costs for treatment are refunded in total provided the claim is valid. “In my view it is the crucial peace of mind factor,” he says.
A further benefit for Prime Health policyholders, adds Hall, is that the insurer offers a no claims bonus which means a reduction if premiums if no claims are made.
Hall adds that people need to be aware that the health insurance they are covered by is a member of the Ombudsman scheme. And he points out that there have only ever been six referrals to the Ombudsman out of a total of 20,000 claims, and in all cases, each one was judged in Prime Health’s favour.
“We feel it is important for us to be pro-customer and, if there is a dispute, we must always make sure we will do all we can to take the customer’s side.” He adds that the company was also the first health insurer to win a Plain English award for its policies.
Hall says insurance is an ethical business and this is something he tries to instill in Prime Health’s staff – the company employs over 500 people. – “When anyone joins, no matter what their position, I will always make sure I have a one-to-one talk with them about their aspirations and where the company is going. How can we show we care about our customers if we don’t care about our staff?”