Innovation is possibly one of the most overused words in the private medical insurance (PMI) market. And it’s one that could not be more inappropriate.
In a healthcare market that is essentially controlled by the government, how can any real innovation occur? There can be tinkering and variations on existing features but until the government takes a decision on how the National Health Service (NHS) will be funded in the future, I do not believe there is any room for real innovation.
Insurers continue to launch products with new features they promote as the innovation that will drive sales and increase market penetration.
In the last couple of years these new features have included higher excesses and changes to benefit levels to make products appeal to a different audience. These are all variations on existing features and can have no real long-term impact on sales.
It is questionable whether the industry is actually doing consumers a favour with these innovations. Consumers do not realise the true price of medical treatment. And by offering them what may be perceived as full cover, but at a reduced premium, it is unlikely they will ever appreciate the real cost until they need to claim and find they do not have the cover they expected. This is not good for the industry as a whole.
But if product development is on hold while awaiting government intervention, where should we look for business? Currently, the only real avenue for growth must be the small group market.
There is much less churning in this sector than among large groups, providing a potential for stability and profitability. Pricing and competition are right too. So while it is still possible to take on business and at least break even, competition has meant the consumer benefits from prices that are fair.
And with a change in the way the NHS is funded unlikely for at least five years, the industry should follow the example set by the small group market and give consumers a fair deal that matches their expectations, not products that claim to be something they are not.