In March 2020, as independent hospitals made their capacity available to the NHS to fight Covid-19 and private treatment was postponed, the future of group medical insurance seemed very uncertain. But, while 2021 will be challenging, there are plenty of signs of optimism too.
The economic fallout from the pandemic is the key challenge. “Some firms are facing financial constraints and we may also see headcount fall, especially as furlough ends,” explains Howden Employee Benefits & Wellbeing head of group risk Martin Collins. “However, insurers also took action during the pandemic to retain customers so it might not be the year many were fearing.”
Pandemic response
Profit shares and pricing pledges were the main stabiliser applied by insurers. “We made a pricing pledge that we wouldn’t profit from the reduction in claims during the pandemic,” says Aviva Health UK managing director Steve Bridger. “To ensure fairness, we’ll assess claims over the two years as employees will be looking to catch up on delayed treatment.”
Dangling the possibility of a return of premium has delivered stability. Collins says he’s seen figures that indicate a renewal retention rate of around 96 per cent. “Employers are reluctant to move their schemes as they’d lose the profit share,” he adds. “It’s a fair response from the insurers: these are exceptional times and continuity of cover is really important. We probably won’t really see the effects of the pandemic until 2022 and beyond.” Alongside this financial commitment, insurers were also quick to reposition their products. Health and wellbeing apps, virtual triage and GP services and digital support were revamped and repositioned to fill the treatment void. “Where employees had a problem accessing treatment, we’d look to introduce a digital triage to support them,” says Axa Health head of corporate sales and strategic accounts Soraya Chamberlain.
This willingness to embrace digital health technology is one of the positives to come out of the pandemic according to Association of Medical Insurers and Intermediaries executive chairman Stuart Scullion. “It’s accelerated development in this space by a good five years,” he adds. “This has the potential to change the market going forward too.”
Getting back on track
Innovation may have helped insurers maintain a meaningful service during lockdown but, as soon as private facilities became available again, the focus was back on arranging treatment. “Insurers worked hard to ensure employees could access treatment,” says Scullion. “Pre-authorisations in 2020 are down on the previous year but in some areas, they’re up to 85 per cent plus of 2019’s levels.”
Availability has come in waves, with private sector treatment dipping as the pandemic surged.
Bridger says claims levels were at 100 per cent or more of normal levels in November and December but this fell by around 20-25 per cent in January. “Inpatient treatment can be difficult, due to the private sector’s dependence on NHS ICUs, but diagnostic, outpatient and day patient care is still available. It varies day to day but there’s greater understanding of the pandemic now and, with healthcare staff receiving the vaccine, it is easier to plan.”
Although there’s private treatment available, questions remain around how quickly the sector will be able to clear the backlog. WPA sales and marketing director Mark Southern says there are limiting factors that will rule out a rapid return to normal. “The size of the private sector and the fact that most consultants also practise in the NHS will limit the supply of treatment. It could take some time,” he says.
Having to wait has also influenced the type of treatment that’s required. Lockdown has sidelined sporting injuries and even musculoskeletal problems such as bad knees and hips have benefited from the stay-at-home regime. Instead, catch-up will be around areas such as cardio, digestive and gynaecological, where problems don’t tend to go away with time.
Health priorities
The fortunes of the NHS also have a major part to play in how the medical insurance market will perform. The latest NHS England figures show that 4.5m people were waiting for treatment at the end of November 2020, up from 4.4m at the beginning of that year. While this is significantly less than the 10m that was predicted by the NHS Confederation in June, the sharp increase in the number waiting more than a year – 192,196 compared to 1,398 a year earlier – highlights the difficulties facing the NHS. “The NHS is under pressure and it will struggle for a few years while it catches up on the waiting lists,” says Chamberlain. “We’re seeing much more interest in consumer medical insurance.”
The stalling of routine health screens will also feed into future health problems. In June 2020, Cancer Research UK estimated that around 2.1 million people were waiting for breast, bowel or cervical cancer – a number that would normally lead to around 3,800 cancer diagnoses. Bridger says, although cancer tends to be less common among the working age population, this is concerning. “Employers may want to use their medical insurance to source treatment to help employees with cancer return to work,” he says. “These missed diagnoses may also affect income protection claims.”
New demand
These waiting list statistics coupled with the experience of living through the pandemic have pushed health and wellbeing to the top of the corporate agenda. “There are challenges such as the economy and Brexit but more employers are looking at how they can support employees,” says Scullion. “AMII corporate members are reporting an increase in enquiries of more than 40 per cent over an equivalent period last year.”
Rather than rely on the NHS waiting list statistics to drive demand, insurers are being careful not to blow this opportunity. Southern says insurers and advisers must demonstrate the value cover offers. “Employers will want the reassurance that their staff can access treatment when they need it but the days of offering a gold, silver bronze proposition are long gone,” he says. “Building on digital services such as virtual GP and wellbeing will meet the needs of the corporate market and deliver the value they want.”
Plenty of activity is already underway in this space. As an example, Collins points to trials of virtual consultants. “Seeing a virtual consultant can shorten the treatment pathway, lower costs and lead to better outcomes for the employee,” he explains.
Advances in other areas of healthcare will also play into future medical insurance product development.
Scullion predicts that advances in remote diagnostics will drive development. “Where someone would have needed to go to a clinic to have blood tests, it’s now possible to get the same detail from a saliva or urine test that can be carried out at home,” he expla in s . “Digita l h ea lth propositions are also evolving making it much easier for employees to manage their health at home.”
These innovations, many of which lower costs while improving outcomes, will also influence medical insurance’s price point. Rather than being a perk for the executives, its focus on health management and prevention will make it a more affordable option that could be rolled out across the workforce. “We’re seeing insurers looking at products that are around £200 a year,” says Collins.
This, and all the other work that insurers have put in over the last year, could prove to be a game- changer for the medical insurance sector.
Bridger adds: “The pandemic has forced everyone to evolve much more quickly. There’s a real chance that the market will now be stronger and more relevant.”