The group private medical insurance market may, from the outside, look an unpromising prospect for corporate advisers looking to expand their business. The sector has certainly been buffeted by headwinds in recent years: the ever increasing cost of medical treatment has had an inflationary impact on premiums, causing sales to flatline. This in turn has led to increased consolidation in this sector, particularly among the firms that provide consultancy and advisory services to the larger corporates.
However, many in the industry point out that this creates opportunities for advisers, even if it is set to continue. Axa PPP Healthcare distribution director Chris Horlick says: “I expect there to be further consolidation in the consultancy market, with companies like Mercer, Aon and Willis Towers Watson dominating.”
He points out these firms tend to focus on larger FTSE100 companies, creating opportunities for others to provide high-quality advisory services to mid-sized and smaller corporate across the country. Many of these companies might feel that they are not being as well served as the could be at present, Horlick adds.
Horlick points out that this SME opportunity could be relatively short-lived. “There will be plans for these larger consultancy firms to expand their offering to a wider range of corporates, but given the merger and acquisition activity going on at present, there may not be their prime focus at present.”
For employee bene fit consultants and corporate advisers looking to expand into this market, another option is to start looking at their current client base.
Aviva UK health and wellbeing sales director Nick Reynolds says: “Opportunities for expansion in the PMI market are often within an adviser’s existing clients. It may be worth offering to review a client’s benefits provision to identify gaps in provision, and discuss where they may want to increase or improve their offering.”
For example, he says there may be opportunities to extend PMI to parts of the workforce that don’t have access to this product.
Reynolds adds: “We’re seeing extremely high retention rates at the moment and finding growth in the current market isn’t easy, but it is there.”
In order to do this successfully, advisers need to have a clear understanding of the key needs and wants of clients in this market. This will necessarily involve looking at the ‘bigger picture’ and how a PMI proposition works as part of a more comprehensive health and benefits strategy.
Reynolds says: “To fully understand a client’s needs, advisers need to be having meaningful conversations about the business, not just about the benefits structure, but about how a scheme is serviced, and even the hospitals and providers used to supply treatment to employees.”
This he says can lead to a more consultative approach which recognises the interplay between health, rehabilitation and wellbeing benefits.
This is an approach that Aon have used to grow their business. Aon principal Rachel Western says: “As part of improving employee risk management, clients are increasingly focusing on a wider range of areas such as occupational health, wellbeing initiatives and screening programs.
“Understanding how these can work in harmony to the client’s benefit is a key discussion point for us.
“These elements link in with other employee benefits. As a more generalist employee benefits consultancy, we can add value in understanding how these will impact or should be structured to support other benefits in place — rather than just focusing on PMI-related issues in isolation.”
Many providers point out that the group PMI market has evolved in recent years. Horlick says the product is a “lot more egalitarian” with a more comprehensive range of different product options.
WPA commercial director Mark Southern points out that there is now far more opportunity for advisers to tailor PMI solutions, to meet the varying needs of their client’s workforce. “It doesn’t have to be a one-size-fits all approach. Advisers shouldn’t be simply looking to replace one scheme with another. They should be looking at which benefits are actually being used, and are most valued by employees,” he says. “Advisers should be challenging providers to offer propositions that better meet these needs.”
This may involve a menu approach: with options to take a traditional PMI products that provides for private consultations and in-patient treatment alongside lower cost options, for example a cash plan offering dental, optical and physiotherapy benefits.
Southern says: “Benefits, such as dental, can be highly valued and are often more frequently used, particularly by younger employees. “Clients can be paying for expensive PMI cover, but some staff may never use it and may not particularly value it as a benefit. You have to then question whether this is delivering an effective return on investment.”
He says advisers need to discuss with clients what they are hoping to achieve by offering group PMI. As well as fast and convenient medical treatment — enabling staff to return to work sooner — clients may also see this is an important recruitment and retention tool. If employees aren’t using or valuing the product features, is it fulfilling this latter function?
In order to understand clients’ needs and deliver effective solutions, high quality data and analytics are crucial, according to Aon. Many insurers now provide enhanc ed manag emen t information, and share this with clients and advisers.
Western says: “Data and analytics become a key tool in supporting and evidencing how PMI products can impact and support a wider employee benefits programme.”
Horlick agrees. He says advisers need the best quality data across a range of products, including PMI, group risk, and EAP and wellbeing programmes. This can provide genuine insight into policyholders’ claims and behaviour and help devise appropriate solutions for clients.
“For example the information might show what percentage of claims are for muscoskeletal problems. The old approach might be to add an excess for this, if these were deemed too high. This isn’t dealing with the problem though — it’s only dealing with the cost of the problem, and then only over the short term
“But if we can identify where there’s an issue, then we can also ook at why it might be occurring and how it can be reduced. Effective occupational health options, for example ensuring desks and chairs are appropriately set up, might be one obvious way forward.”
Consultants and advisers have a key role to play in helping promote a range of health and wellbeing options to clients, and many expect there could be increased regulation in future years, compelling workplaces to adopt such practices.
For now, these wellbeing and additional support services — which include employee assistance programmes, virtual GP and second opinion services, and a range of online or mobile tools to monitor and improve both physical and mental health — are increasingly seen as a key part of any PMI proposition.
They are often highly valued by both employees and can deliver significant benefits for clients. Figures from VitalityHealth show employees who took part in the insurers active rewards programme had 45 per cent less sickness absenteesim than unengaged employees.
Reynolds says these various tools can help advisers deliver more tailor-made solutions. “Mental health is currently a key concern, and we’re also seeing an increase in requests for niche benefits such as gender identity support.
Wellbeing benefits and services to improve accessibility to primary care, such as Aviva Digital GP, are also growing in demand.”
This range of services available show the value that group PMI products can offer, so any discussion with advisers is not simply about costs.
Western says: “From a PMI perspective, a key part of our solutions that meet longer term key strategic objectives, rather than focusing on short term cost negotiation through benefit reduction or commercial influences, although there will always be clients who are looking for a broking approach where low premiums are the ultimate goal.”
VitalityHealth director of sales and distribution Greg Levine says: “This all all comes back to understanding your client and their needs well.
“Asking what clients are looking for overall and what they’re hoping to achieve takes you beyond premiums, benefit limits and transfer declarations, and right into a place where the product delivers
“It’s rare these days for an adviser to only advise on price, but we do unfortunately still see it.
“But by taking a consultative approach you can show a policy’s full value and help the client in a much more fundamental way, which in turn can help advisers win new clients and maintain a client’s loyalty.”
Opinion: Introducer Opportunity
Advisers with no expertise in the PMI can still profit from this sector says Association of Medical Insurance Intermediaries executive chairman Stuart Scullion
“Many IFAs and most wealthmanagers are reluctant to get into health and wellbeing products and services because of the perceived complexity and the myriad of products on offer.
“There is no doubt that advising on healthcare, whether private medical insurance or health cash plans, requires specialist knowledge.
“Products and benefits are wide-ranging and underwriting is complex, as is transferring between one provider and another. It may not make sense for you to invest the time and effort to become and expert if you are only going to get involved occassionally.
“But there is a way in which you can expand your business, increasing your revenue and strengthening your client relationships without the need for you to become experts.
“The Association of Medical Insurers & Intermediaries (AMII) represents around 120 intermediaries who specialise in healthcare and work with clients throughout the UK.
“Most of these intermediaries would be happy to enter into some form of introducer arrangement to provide you with the professional expertise to advise on these products.
“Whether you refer to them as a business partner or your retained specialist consultancy for health and wellbeing, the outcome is the same. You get the benefit of expert advice which compliments your client relationship without the pain of developing the knowledge in house.
“Visit amii.org.uk and click on Find An Expert. Specify your geographic area and the website will provide you with a list of specialists in your area who would be happy to discuss introducer arrangements with you.
What have you got to lose?”