This letter is from an intermediary concerned by PPP healthcare’s discount deal with Secure Health.
The PPP healthcare deal with Secure Health has the potential to put many intermediaries out of business within 12 months. The PPP underwritten corporate product which Secure Health can offer to clients has more cover and benefits than the PPP product available.
Additionally, Secure Health can pass on a discount of around 40 per cent to its customers. How can an intermediary offering the standard PPP product hope to compete?.
Although PPP has stated that this is a deal it has inherited from Guardian Health which it must continue to honour, surely it could protect the interests of intermediaries in some way.
Other providers which have operated similar discount deals have issued protected broker lists – if the broker offering the discounted deal finds an intermediary is already advising the group they don’t take the sale any further. Alternatively, why doesn’t PPP make a similar deal available to all brokers? If it can do this for one group why not for all?
While I have no grievance with Secure Health about this matter, I do think PPP is behaving unfairly.
If one of my existing PPP clients came to me with details of the Secure Health scheme, and its 40 per cent savings, what can I do when the competition is this unfair?
Is this any reward to intermediaries for having sold PPP products and remained loyal to the company?
And isn’t it slightly ironic that Secure Health is now offering its PPP underwritten product to other intermediaries to sell on to their own customers? This situation of an unfair playing field must be resolved otherwise many small to medium sized intermediaries will find their businesses seriously affected. Name and address supplied
PPP Healthcare explains its position
I would like to allay your correspondent’s fears but first it may be helpful if I clarify the relationship between Secure Health and PPP healthcare, which now includes the medical insurance business of Guardian Health following our acquisition by the Guardian Royal Exchange Group.
One factor that contributed to the success of Guardian Health was the way in which it entered into agreements with distributors such as building societies, direct insurance writers and intermediaries to develop, underwrite and administer new bespoke medical insurance policies for their members/customers.
In this vein Guardian Health agreed in 1996 to develop and underwrite a suite of corporate and personal products for Secure Health – a long term contractual arrangement which we at PPP health care are continuing to honour. Whilst this sort of arrangement may be relatively uncommon it is certainly not exceptional.
The arrangement with Secure Health may have resulted in some anomalies pricing in the market-place, largely as a result of differences in the way PPP healthcare does and Guardian Health did price their medical insurance business. For example, differences in prices vary with the size of the group and the ages of the people covered.
I would like to reassure your correspondent that in all probability this will be a relatively short lived effect because we will be addressing these anomalies over time. However, by no means is the difference in price invariably the 40 per cent figure currently bandied about.
For example, we would currently charge a typical small group scheme comprising five people aged 34, 40, 44, 50 and 52 an annual premium of £2223.10 for our mid-range Executive policy compared with £2114.24 for Secure Health’s corresponding Gold policy – a saving of five per cent.
And when we implement our next subscription review on 1 October 1999 (which we base on each product’s latest claims experience), the premiums for the two policies will be £2358.70 and £2431.38, respectively, making the Secure Health product three percent more expensive than its PPP healthcare counterpart.
Of course insurers must safeguard the confidentiality of clients introduces to them by intermediaries but we do not believe that customers would be well served by the ring-fencing of intermediaries’ business. In any case this would be contrary to the agreement Guardian Health made with Secure Health which, as you would expect, we will continue to honour.
We believe that it is in the best interests of customers for intermediaries to be free to compete with each other for their business.
Yours faithfully Nye Jones, channel development manager PPP healthcare