A nationwide initiative by Prudential designed to encourage more IFAs to sell private medical cover, has been welcomed by specialist brokers.
Prudential is marketing a new product add-on – called Health Optimiser – at a series of roadshows across the country through its PruProtect brand. The product design means that IFAs are now be able to add private medical insurance (PMI) to protection plans from PruProtect at a discounted rate, enabling them to help clients avoid a costly overlap between PMI and protection cover.
Specialist healthcare brokers – who currently control a niche area of the individual PMI market – said they welcomed the initiative and denied that it represented a “dumbing down” of medical insurance. A number told Health Insurance they would be considering it for some of their clients, if appropriate.
Sarita Manzi of Get Private, a specialist broker based in North London, said: “I believe the product will sit well in the market and I am willing to test it with my clients as this could be a great cost saving option for those people paying for critical illness and PMI separately.”
Claire Stock, a senior employed healthcare adviser at Chartwell Healthcare, said: “Not only will this be fantastic for PruProtect but for the industry as a whole. It could change the way advice is given and clients are protected in future.”
UNDERWRITING AND COMMISSION CONCERNS
Given the fact that the PMI option is being offered as part of a protection contract, traditional PMI underwriting options such as CPME (continuing personal medical exclusions) or moratoria will not be available.
Brian Walters of Cheltenham-based specialist Regency Health, said that while he welcomed “another innovative offering” from Pru, the insurer’s determination to satisfy adviser demands for convenience was one – albeit slight – area of concern.
“My only concern is that it could encourage advisers to place PMI business with PruProtect for the sake of convenience when a whole-of-market review may expose a better option for the client – perhaps even with PruHealth,” he said. “The underwriting – FMU[full medical underwriting] only for adults – is a weakness of the product.”
Similarly, Steve Cooper, an independent healthcare consultant with Premier Choice Healthcare, asked: “If a claim was made and the premium shot up, the client may either cancel or seek an alternative insurer. If the latter, then that could be good news for us.”
Some advisers, meanwhile, expressed concerns about the commission structure being offered by PruProtect.
Tony Hulatt of Leicestershire-based healthcare specialist Brokerbility said that, while he would like to give the proposition greater consideration before making a final judgement, there appears to be a disincentive for advisers to review their clients’ needs on a regular basis.
“With separate policies an adviser could at least review periodically and consider alternatives, especially where the PMI and life cover is concerned,” Hulatt said. “The commission of 94.5% initial suggests that Pru is expecting advisers to sign up and not review clients requirements certainly in the short run. This isn’t how we’re used to working and I certainly would feel uncomfortable advising my clients that I am taking 94.5% commission.”
Deepak Jobanputra, actuarial and product director at PruProtect, said: “The product and commission should not discourage an adviser from meeting the long-term needs of consumers with this proposition since it is a value-based proposition that allows consumers access to flexible and comprehensive health and protection cover while giving access to Vitality, our health and wellness programme which offers the opportunity for premiums to reduce prospectively.”
CASH OR CARE
There is little evidence that brokers have significant objections to the cash lump sum or medical treatment option being offered as part of the Health Optimiser part of the proposition.
Walters said: “I don’t think it undermines the concept of PMI, but it may be a pointer as to where PMI is headed. Freedom Healthnet offer a cash sum exclusively, and Chartis [formerly AIG] offers a cash sum or treatment in a BMI hospital.
“Increasingly, consumers are questioning the value of PMI against a backdrop of rising premiums and reduced waiting times on the NHS and the idea of realising a cash benefit may well gain traction.”
Jobanputra responded: “We believe that it is key that we offer choice to the customer who is best placed with their doctors’ guidance to make this choice. Consumers needs will vary depending on their personal circumstances and by offering this option we offer flexibility.”
THE PRUPROTECT HEALTH OPTIMISER – HOW DOES IT WORK?
By adding PruProtect’s new Health Cover or Health Cover Optimiser options to the insurer’s protection plans (life, serious illness or income protection), consumers can access private medical treatment as well as a lump sum or regular payment should they need to claim under the protection policy terms. This option enables consumers to get a 5% discount compared to buying the covers separately.
Alternatively, consumers can save up to 25% on the cost of buying PMI separately from PruHealth by choosing to add the Health Cover Optimiser to a Serious Illness Cover policy. This allows them to either take the lump sum from the Serious Illness Cover, and not receive any private medical treatment, or take a smaller lump sum, and use the rest to pay for medical treatment. For conditions that do not trigger a serious illness claim, the Health Cover would cover treatment in the normal way.
Three levels of health cover are available: comprehensive, primary and heart and cancer cover.
There is one application form and one number to make a claim but the Health Cover is an annual policy which means it will need to be renewed every year and may be subject to changes in premium or cover. PMI is subject to different underwriting terms to protection cover, which means that consumers may not be able to get Health Cover for the same term as protection benefits.