In February 1998, Guardian Royal Exchange acquired PPP healthcare for £435 million, becoming the second largest private medical insurance provider in the UK.
As the GRE group was by far the larger company, many in the industry were surprised by its decision to abandon the corporate identity of Guardian Health and adopt PPP’s logo and branding. Many intermediaries immediately expressed concern about losing the Guardian brand which had won recognition for its high levels of service and cost competitiveness, in particular for small group business.
But, according to the group, the integration will lead to “a clearer identity, greater efficiency and a significant reduction in the cost base”.
Indeed, when the acquisition was made, Guardian forecast savings to the tune of £14 million, and the predicted figure for 1999 has been put at £25 million.
But the restructuring has also led to casualties on both sides. On 14 October last year, Guardian announced that as a result of reviews of branding, products and business concentration, it was to close the GRE offices at Folkestone and Eastbourne and concentrate its entire health portfolio at PPP’s Tunbridge Wells head office. It is expected at least 300 jobs will be lost.
But what has been the effect of this major reshuffle for intermediaries who deal with one or both of the companies? Initial reactions to the merger have been mixed, largely due to frustration at the lack of a clear message about which products will remain and which will be axed.
And this level of confusion has led to some intermediaries recommending their clients consider other players in the healthcare market.
One broker remarked: “Frankly I’m very cautious now because no-one knows what’s happening with the products – I don’t want to advise a client to take a superb policy if three months down the line it’s going to be ditched.”
Other intermediaries are concerned they will lose the contacts who understand their business priorities and with whom they have built a rapport. Liz Hammond, director of client services at Cheshire-based Private Medicine Intermediaries, said: “We had a very good service from someone at Guardian with an awful lot of experience. I always found Guardian to be ultra flexible as a provider, and if I needed to ask a favour on behalf of a client I felt I was likely to get it because Guardian knew me and trusted my reputation in the business.”
It falls to Nye Jones, sector manager, channel marketing, at PPP healthcare, to address these reservations. Jones handles the marketing for all non-direct business, and is eager to reassure intermediaries.
He explained that at the time of going to press he was unable to be specific about how existing products would be integrated, but said details should be made available to intermediaries. The GRE group has already made clear its intention to “develop a new family of health products for individuals and corporates, recognising customers’ requirements for simpler health solutions.”
And Jones acknowledged that the new packages were likely to include features of the PPP product range because the company is much further along the evolutionary ladder, health insurance wise.
He said: “Where PPP was driving it will continue to lead, and, in essence, its products will come through, but they will be administered under the system developed at Guardian Health.”
On the issue of maintaining business relationships, Jones said needs of staff will be paramount, and, as some are keen to relocate to Tunbridge Wells, he is optimistic about providing as much continuity for intermediaries as possible.
A more long-term worry for the IFA is whether their business will be as highly valued under PPP as it was under Guardian Health. Jones is categorical about this: “If anything we do impacts on the intermediary in any way we will inform them personally and honour our accounts. They are an integral part of the change.”
He is supported by GRE group chief executive John Robins, who commented: “Our new business through the IFA channel has grown by 35% this year and we are confident this trend will continue.”
For Nye Jones, the key is focus: “It is fair to say PPP has a multi-distribution channel, whereas Guardian Health was very proactive about seeking new IFA business.
“What we want to do now is ensure we identify different intermediary sectors. We want to look at the way IFAs are evolving as a distribution channel – some are consultants, some are very product-specific – and provide support for their individual needs.”
One intermediary speculated Guardian’s take-over of PPP healthcare was part of a fight to the finish between the two biggest players in the PMI market, BUPA and PPP healthcare, in which intermediaries are victims of a corporate battle and the customer has ceased to be the chief concern.
But Jones was equally forthright in his response: “This is a matter of strengths coming together. The strategic plan was for Guardian to make an acquisition and achieve critical mass in the healthcare field. PPP had three potential suitors when it began seeking a partner, and Guardian shared a health and welfare vision with PPP healthcare which made it the best fit.”
It seems intermediaries have little choice but to be patient and see what changes take place this year. Jones is adamant they will not have to wait long.
He commented: “I can see why it may appear things are exactly the same at present, because on the surface the brand and the office are the same PPP as before, but soon subtle changes in terms of the way the actual business is managed will become apparent. We are not going to operate two systems. There are to be initiatives to reconstruct customer services at Tunbridge Wells based on best practice from Guardian Health at Folkestone.”
It is certainly not all bad news. The official message is that the best bits of each organisation are to come together, and this is certainly reflected by the balance of the UK and Ireland executive team: of the fourteen members, six are from PPP and eight are ex-Guardian Health.
The idea of such a hybrid has been greeted with enthusiasm by intermediaries.
Specialist PMI broker Andrew Green, of Green Denman, said: “PPP has a good range of individual plans and a good reputation. The brand is a strong one.” George Connelly, of Healthcare Matters, added: “I liked the Guardian Health ethos: the benefits were good and the service was excellent.
“If the ethos continues to shine through, the company will be a winner.”
And until the dust has settled, it is down to intermediaries to make sure they bear the brunt of any upheaval and ensure the transition is seamless for their clients.