Anyone casting an eye over the group PMI market recently can’t help but notice a few changes to the menu. This once static sector has been refreshed by the notion of increased flexibility and choice.
So what has motivated the change? Some say it is the consumer-centred culture, where purchasers are taking an increasingly demanding stance and insisting on healthcare policies that fit in with their specific needs, instead of settling for the ready-made offer. “I think that everyone is desperate for innovation in the market, including consumers,” confirms Liz Hammond, director at Cheshire-based Private Medicine Intermediaries. “And the concepts behind some of these new products are very strong as they can adapt to a wide range of lifestyle and needs.”
The increased presence of flexible plans suggests providers expect more employers to consider the provision of PMI as an employee benefit. This is partially due to the expansion of the small corporate sector. But it also anticipates employers targeting staff further down the hierarchy for whom PMI is less common. In this case, flexible plans can give employers the option to offer basic cover to employees, with the in-built option to enhance cover should it be necessary. Should a member’s needs change or should the employer wish to extend the policy for remunerative or promotional reasons, cover can be easily adapted.
Royal & SunAlliance’s (RSA) Values product, launched in January this year, is a prime example of the flexible approach. RSA has sold £15m worth of Values since its launch and has seen a renewal rate of 90 per cent.
The product was born from RSA’s recognition that the market, particularly the small corporate area, had changed. “This sector has become a lot more sophisticated and has a clear view of what it needs and wants,” notes Gerry Callaghan, head of sales and customer relations, RSA Healthcare and Assistance. “We set out to grow this area of the market. Sixteen per cent of Values clients have never had PMI before so I think we have managed that.”
WPA’s new Enterprise Flexible Benefits scheme is the latest in this stream of products making choice the principle of the policy. The core benefit provides standard cover including hospital charges, specialist in-patient and day case services, NHS cash benefit and MRI scans. The scheme adds quality to the most basic cover through a health information support line and cover for psychiatric treatment.
Enterprise Flexible Benefits then gives clients the choice to enhance their cover by choosing any of the five bolt on options. An out-patient option offers swift access to specialists, avoiding the long waiting periods so common on the NHS, and a therapy option gives £1,000 for all listed therapy types, which include physiotherapy, osteopathy and homeopathy. For staff conducting business abroad there is a worldwide option giving full cover for repatriation, evacuation and family assistance. Dental cover, increasingly popular with the corporate sector, will contribute towards both serious and routine treatment. The cash plan option offers the usual optical, dental and physiotherapy benefits, and can also be purchased as a stand-alone benefit for employers who find it is not possible to provide every staff member with WPA’s Standard Cover.
But flexibility is not just about adding benefits or numbers of staff covered. Eliminating unnecessary cover gives a solution to cost-conscious employers who previously avoided PMI, perceiving it as too expensive. Flexible plans keep benefits and costs pertinent to the client’s present needs, so costs can be kept down without sacrificing the quality of cover.
It’s great news for brokers too. For those employers who are not familiar with the mix and match style product, a broker can be invaluable. “They can be complicated products to understand,” says Hammond. “Purchasers and group secretaries may need help grasping these policies, so brokers are very important.”
Some disagree with the pick and mix approach, arguing that the essential function of PMI is to protect against the unexpected so blanket cover is more important. “We prefer to offer our customers a comprehensive policy, with as wide a range of cover as possible,” says Phillip Fowles, sales and marketing director, at BCWA. “Should people really want extras, then by all means, they can bolt on a dental plan or a cash plan.”
There are also underwriting concerns.
Derry Andrews, general manager of Strasbourgeoise, underwriter of the Clinicare range of products, says: “From the consumer’s point of view, flexible plans are obviously attractive. But from an underwriting point of view, these plans are very difficult to price, because when people choose these products they are naturally going to choose the benefits that they think they will use the most.”
But the signs are that many providers are promoting consumer involvement in product mechanics. Norwich Union’s Fair and Square allows clients to choose if they wait for NHS treatment and collect the cash or receive private treatment immediately. And abandoning the strict, ready-made approach in favour of cafeteria-style options promotes the imaginative input for brokers, providers and consumers alike.