WPA is one private medical insurer that has never shied away from telling it like it is. Its managing director of corporate clients, Adrian Humphreys, tells Health Insurance editor David Sawers why he believes innovation is alive and kicking
Adrian Humphreys doesn’t want to talk about himself – a slight problem for any journalist trying to write a profile piece. It’s clear, though, that he’s got a few things he wants to get off his chest, so that should help.
“Let’s scotch this thing which bores me to tears – and which bores all of us to tears,” he says. “‘There’s no innovation in our industry.’ This is one of the most innovative periods in our industry that there’s ever been.”
Looking back at WPA, where Humphreys is managing director of corporate clients, over the past few years seems to bear that claim out. From its headquarters in Taunton, Somerset, the private medical insurance (PMI) provider has carved out a reputation as one of the most independent-thinking organisations in the sector. But innovation is not an easy thing to achieve in an environment defined by a monolithic health service.
“I can understand why people say there’s been no change, because the biggest changing force in the health insurance industry hasn’t changed much in the past, and that’s the NHS,” he says. “It has broadly been the same.”
Now, though, there are “tidal waves of change” altering the landscape dramatically.
The emergence of expensive new drugs and treatments such as monoclonal antibodies means innovation in terms of healthcare funding is inevitable.
“Now it’s changing, it’s getting very expensive, the government is finding it harder and harder to fund and already you’re seeing creaking at the seams,” Humphreys explains.
That creaking prompted WPA to develop its “NHS Top-Up” proposition in order to help employers and individuals to bridge the gap between what the health service will fund and the increasing number of services, including access to certain cancer drugs, that it will not. A concrete example of innovation in action, Humphreys claims, and one which certainly generated more column inches in the national press than an organisation the size of WPA would normally enjoy.
In spite of his humility, Humphreys has been fundamental to WPA punching well above its weight since he joined the organisation back in 1998 after first training as a scientist then enjoying a spell at Arthur D Little Inc as a management consultant.
Then, a chance meeting with Julian Stainton – the WPA chief executive who has his own reputation as an innovator and independent thinker – brought the self-confessed “outsider” to the health insurance industry into the fold.
THE CORPORATE DEDUCTIBLE
Since that chance meeting, Humphreys has been at the forefront of some of the most innovative thinking in the sector and is now focused on a fresh approach to the structure and administration of self-funded corporate healthcare trusts (CHTs).
Ten years ago, CHTs – where large companies self-insure as opposed to buying traditional PMI – were considered “rather esoteric rare geese”, Humphreys explains. Now, of course, very few large companies do not have some form of CHT and the concept is seen as “the norm”, he says.
True to his word, though, Humphreys and WPA have been busy looking for ways to innovate here as well and the result is the “corporate deductible” (for more on the corporate deductible see the May issue of Health Insurance or click here).
Essentially, the concept means that employers can be even less exposed to tax liabilities than they would be through a traditional CHT. Again, WPA has caused waves in the sector with some competitors and intermediaries uncertain of the mechanics behind the idea.
Humphreys is absolutely confident, though, that the concept is watertight, and WPA has secured the opinion of legal counsel to back its claims up. The provider has also recently held broker events to clarify the concept further in the minds of intermediary partners. But while Humphreys does not believe that WPA’s latest example of innovation is itself overly complex, does he not agree that intermediaries need to understand it fully before recommending it to existing CHT clients?
“Absolutely,” he says. “I wouldn’t advise any intermediary to try to start selling stuff they don’t understand, that would just be stupid. But this is not particularly difficult to understand and if they really are nervous about it then the easiest thing in the world to do – and three or four of our customers that have moved to corporate deductible have done this – is go to your local tax office and seek advice.”
Humphreys says that WPA is “quite happy” to supply a written form describing how corporate deductible works but is unwilling to publish the findings of its research simply because it believes this gives it competitive advantage.
“We’ll show people a bit and we’ll show them letters from the Inland Revenue and all that sort of stuff but we’re not prepared to send them around, for the simple reason that we’ve paid good money to get this,” he says. “It gives us a market advantage. Why should we do all the work and hand that to our competitors to just roll it out and go forward with it? We’d much rather that they went and did their own research.”
One of WPA’s competitors – Aviva UK Health – has recently done just that, launching its own version of the corporate deductible known as Corporate Excess. And while other providers are not unveiling their own propositions just yet, Humphreys believes that they could very well do so as an increasing number of employers look to make the move away from traditional CHT.
“I’m sure people said the same thing about steam trains when they first came along,” he says. “‘Oh don’t get on that because we haven’t invented it.’”
Certainly, if insurance premium tax rises again, a “wave” of companies could move toward corporate deductible, Humphreys argues, and brokers that fail to at least consider it for large employers could potentially be at risk of a mis-sell
Brokers, Humphreys continues, have undergone some major changes in their own right, not least in the way WPA interacts with them. Even until as recently as five years ago, the provider had a slightly strained relationship with some intermediaries, he concedes.
“If you’d asked us about intermediaries five years ago or written about WPA you would have said, ‘WPA – rather anti-broker’,” he says. “I would argue that we weren’t anti-broker at all, what we were ‘anti’ was poor practice. We were ‘anti’ brokers constantly ringing us up saying, ‘can we have lower prices, can we have easier joining terms, can we have greater commission please?’
“So were we anti-broker? Is it us that’s changed or is it the broker market that’s changed? […] I don’t think we’ve changed at all, I think what’s happened is we’ve stayed exactly the same. Our attitude has stayed the same and the market, I think, has moved in line with our attitude.”
According to Humphreys, WPA is doing “serious” business with around 20 brokers at the moment “because it’s been a grown up relationship right from the very start”.
There is a level of trust where there are even discussions between the two parties around intermediaries setting their own fee rates.
“This is the sort of idea that is being bandied around now,” Humphreys explains. “Whether or not it’s got legs I don’t know […] but this is, I think, a big change that’s happened because we’ve got a parent-to-parent relationship now.”
Furthermore, intermediaries that work with WPA are not concerned by the fact that the provider operates a franchisee business with a self-employed salesforce and they understand that there is room for both models to operate in parallel, Humphreys claims.
“The franchise concentrates on business of broadly about 10, maximum about 15 employees,” he says. “The sort of brokers we’re dealing with almost exclusively don’t get out of bed for anything less than 15. So there’s a nice little dividing line.”
Humphreys argues that brokers that do engage with WPA and its philosophies stand to reap the rewards, for example in terms of getting access to improved levels of service and administration. Some 80% of claims, for example, are not even handled by human hands, freeing up the provider’s claims staff to support members through more complex cases.
But while he brushes WPA’s reputation for good customer service off as a simple “hygiene factor” which should be a given, Humphreys is nonetheless “proud” of the way the insurer interacts with brokers and their clients.
“It’s almost damning with faint praise to turn around and say we offer good customer service because that infers rather old fashioned products, rather old fashioned in how they behave, rather old fashioned this or rather old fashioned that.
“I’m actually rather proud of the fact that we’re quite old fashioned in how we behave in that genuinely we do try to treat others like we expect to be treated ourselves. I don’t like treating people badly.”
Suggestions that WPA is “old-fashioned” in its approach to small corporate business is also something which Humphreys is happy to live with – not least, perhaps, because it resulted in growth of between 4.5-5% last year. Humphreys is adamant that the provider remains committed to community rating.
“So many people have cast stones at us over the years, saying, ‘You’re really old fashioned, you just do community-rated pooled business, why don’t you do no claims discounts?’ Well – genuinely – the reason we don’t do no claims discounts is not because we can’t technically do it. It’s the easiest thing in the world to do that. It’s because I’ve always worried about the small company where the administrator who runs the scheme […] needs to make a claim but doesn’t because he or she is sitting there thinking, ‘If I do that the premiums will go up and the company will struggle’.
So insurers can be nice guys after all? In the end, Humphreys can be persuaded to talk about himself.
“I would like to be thought of as either kind or decent,” he says. “I think the words are probably the same, but kind is a good word. Wouldn’t it be nice if your epitaph said he was a kind person? […] It doesn’t necessarily mean if you’re kind that you’re enjoué or a naive idiot. It just means that you’re trying to be decent. I think that’s actually quite a good thing to live by.”
Adrian Humphreys is responsible for all corporate business at WPA. Before joining WPA, he worked for six years for Arthur D Little Inc as a management consultant in the UK, the US and the Far East specialising in holistic risk assessment. He holds a degree in physics and mathematics from Reading University, a Ph.D in chemical physics and an MBA from Cranfield School of Management.