Intermediaries are challenging the bleak forecast delivered by Standard Life Healthcare’s commercial director at Laing and Buisson’s annual PMI conference.
Laurent Pochat-Cottilloux predicted that the private medical insurance (PMI) market would lose 650,000 lives by 2012, citing the economic downturn and rising costs as key threats to the survival of the industry, compounded by a failure by providers to adequately market their offering.
“The economic storm is battering an already weak PMI market that is not in its infancy,” said Pochat-Cottilloux, who estimated that a “partial rebound” would occur with economic recovery. Beyond 2012 he envisaged three possible scenarios: government intervention (precipitated by the impossibility of the NHS funding all care), a gentle decline (if rising costs do not reach a “tipping point” for either the NHS or PMI by 2012) or the evolution of PMI as a “luxury ghetto product”.
Intermediaries contacted by Health Insurance questioned Pochat-Cottilloux’s stark prediction.
“I wouldn’t be as pessimistic as that,” said Richard Munro, managing director of PMI Health Group. “Clearly the rising cost and economic pressures are a problem but I’m not sure we are going to see a reduction on that sort of scale. People do value private healthcare and they are reluctant to cut back on it unless they really have to.”
Munro said companies were particularly reluctant to make cuts given the damage it could do to employee relations.
“We are trying to offer clients a broader range of products other than renewal in order to show that you can pick a level of cover to suit your pocket”, said Stuart Scullion, sales and marketing director at the Private Health Partnership, who said that no impact had been observed at the large corporate end of the market.
Last month, Fergus Craig, commercial director at insurer AXA PPP healthcare, told this magazine that the PMI industry was at risk of contracting by 10%, if hospital providers and consultants failed to adapt their business practices. Asked to comment on the even bleaker forecast from his equivalent at Standard Life Healthcare, he said Pochat-Cottilloux had missed out the most likely scenario.
“For a very long period of time, 10%-11% of the population has had PMI,” he pointed out. “The most likely scenario is that after some decline, in some terribly English way, we muddle on largely as is. It is a pretty resilient figure. But one thing that really concerns me is if one or two respected companies pull the plug. That could lead to a bit of a tsunami of people pulling the plug.”