Two years on from the start of the pandemic and it’s been a bit of a rollercoaster ride for the group PMI market. Although things looked bleak initially, as private healthcare facilities were transferred to the NHS to fight Covid-19, today, the outlook for the market has never looked brighter.
This change in fortunes is down to a number of factors, with rebates sending out a very positive message about insurers’ intentions. “Insurers were very quick to tell customers that, if they couldn’t use their policy, they’d get some money back,” says Towergate Health & Protection chief executive Iain Laws. “This was well received and demonstrated integrity and customer focus.”
Rebate action
With pandemic-related rebates a new phenomenon, insurers took different approaches. Two have already made payments, with WPA paying two rebates each equivalent to around 40 per cent of monthly premium in April and June 2020 and Bupa paying out £125m – approximately a months’ premium – in April 2021. “We wanted to do it then rather than hang on to see whether claims levels bounced back,” says WPA commercial director Mark Southern. “It was important from a trust perspective, and it was also when our customers needed the money the most.”
Rebates are also expected from Aviva and Axa Health, with both insurers waiting to assess claims levels before committing to a payment. Dr Doug Wright, medical director at Aviva UK Health, explains: “When we made the pledge back in May 2020, we thought everything would be clear by the end of 2021 but it’s just as uncertain now so we’ve extended the period until the end of 2022, and expect to make a payment in 2023. We don’t want to give a rebate then see lots of delayed claims come through that would force us to put up premiums.”
Market reaction
This delay caused consternation a year ago, with customers feeling they had to stick with their insurer to qualify for a rebate but Claire Ginnelly, vice chair of the Association of Medical Insurers and Intermediaries, say this is no longer the case. “It’s not really affecting the market anymore,” she says. “Where rebates are pending, insurers have clarified who qualifies, so we’re just waiting for it all to wash through.”
Not every insurer went for a rebate though, with Vitality announcing early on in the pandemic that it would invest in additional services rather than pay a rebate. “We introduced health and wellbeing and clinical services as well as bringing on board new partners to help employees stay healthy during lockdown,” says Pippa Andrews, director, corporate business at Vitality UK. “We also reviewed our rewards to motivate members, bringing in on-demand movie rentals and coffee deliveries to replace trips to the cinema and coffee shop.”
Although there’s much more clarity now, the different approaches do mean there have been some difficult conversations between brokers and their clients. “Questions were asked about why some insurers were able to pay a rebate and others weren’t,” says Laws. “Clients also wanted to know whether, if they got a rebate, would it mean premiums would increase more quickly in the future if claims came through.”
Claims behaviour
How rebates and pricing play out comes down to claims trends. Restrictions around private healthcare coupled with reluctance to access it means elective treatment was often delayed. “Private sector capacity started increasing in May 2020 and was back to normal by July/August of that year,” says Dr Wright. “We’re seeing above normal levels of claims going through to diagnosis but figures are below for hospital admissions as people are still not comfortable getting treatment.”
Many expect this to change. Lifepoint Healthcare founder Isaac Feiner expects to see a spike in claims as more normality returns. “We’re already seeing an increase in claims as people feel more confident about accessing treatment,” he says.
“I also expect we’ll see further claims coming through as a result of late diagnoses.”
Dr Wright agrees. His big concern is missing cancer diagnoses. Many of these come through GP appointments and, with access an issue, there is a risk that cancers will be picked up later when the prognosis is worse and costs potentially larger.
Although there are concerns, the outlook remains uncertain. Andrews says that while she’s seeing more claims, she doesn’t expect lots more to come through. “We used supported pathways and encouraged screenings and diagnostics to ensure people accessed treatment where necessary,” she says. “We didn’t see a significant drop off in claims during the pandemic and our oncology spend has remained high.”
Digital efficiencies
Whether or not these additional claims materialise, the pandemic has had a positive effect on claims too. Ginnelly says that as well as an increase in digital healthcare options, attitudes to them have changed. “Before the pandemic all the add-ons weren’t really given the attention they deserved but lockdown changed this. They’re much more likely to be part of the conversation with clients, which is great for employees.”
It’s also good for insurers and employers as the adoption of digital health services such as virtual GP and online physiotherapy, plus greater use of treatment pathways, has driven efficiencies in claims. “Insurers are finding ways, where it’s practical, to be the gatekeeper on claims rather than the GP,” says Laws. “This speeds up a claim, reducing the cost and the amount of time someone may need to take off work. This development is good for all parties, including the NHS.”
Many of these services also support a prevention strategy. For instance, being able to see a virtual GP rather than wait two weeks to get an appointment with their own doctor, can resolve issues quickly. Dr Wright says the results seen through his company’s pathway options, such as BacktoBetter and its mental health pathway, at least equal if not exceed those achieved through face-to-face healthcare delivery.
Health agenda
Responding to customer needs during the pandemic has served insurers well but the sector also stands to benefit from another Covid-19 side-effect – a heightened awareness of the importance of health. “There’s been an increase in interest in health benefits,” says Feiner. “We’re all more aware of the value of health and, with the media highlighting the issues with NHS waiting lists, demand is high for all the health insurance benefits.”
This can be seen in the sales figures with insurers reporting increases in enquiries, including from businesses looking to take out cover for the first time. “We’ve had more enquiries, more sales and more employers looking to expand a scheme across their workforce,” says Andrews. “We’ve also seen clients taking out additional benefits such as dental and optical or removing excesses to enable faster access to treatment. The market is very buoyant.”
Other dynamics are fuelling demand too. The talent war is forcing employers to improve their benefits package, with health a popular option. Additionally, concerns over NHS waiting lists mean that employers are looking to medical insurance to ensure staff can access treatment promptly where necessary.
Dr Wright says these factors are shifting perceptions of medical insurance. “It’s no longer regarded as a luxury product but as an integral part of how an employer manages the health and wellbeing of its workforce,” he says. “It’s a real opportunity for the market.”