The Office of Fair Trading could soon “benchmark” PMI products so consumers can make straight comparisons in value between different policies.
This benchmarking would force PMI providers to list core benefits and features in plain and simple language.
A proposal will be put to the OFT by The Research Department, an independent research company.
The Research Department specialises in analysing financial services. Its flagship product is the Aequos database which holds data on a wide variety of subjects, including healthcare, investment and pensions.
The company has launched the initiative to de-mystify PMI products after the OFT health report, published in 1996 called for a more “consumer-friendly” approach to selling health insurance.
OFT director general, John Bridgeman said: “The combination of medical matters and insurance makes these products doubly difficult to understand and almost impossible to compare. One of my recommendations is that the industry should develop benchmark products in which core terms and benefits and key features are clearly and simply described.”
The Research Department said it was time for action as little had changed in the health insurance market since the OFT report 18 months ago.
Although the Aequos database had always been marketed as an industry tool, The Research Department hopes to utilise this information for consumers. Business subscribers to the package already use its benchmarking and ranking for direct “like-for-like” comparisons between products.
The Research Department is already in negotiation with several insurers, many of whom are keen to talk with them rather than wait for the OFT to impose its own regulation. So far the Research Department said: “results have been encouraging”.
David Potter, director of OHRA, welcomed the proposals. He said: “PMI sets so many traps for the client and then the broker gets the flack. We need standards in promotional material.”