High premiums, product complexity and a lack of market growth have turned group medical insurance into a no-go area for some advisers. But an upswing in virgin business shows that opportunities are there for advisers that develop a genuine consultative proposition.
Figures from LaingBuisson show that the number of corporate policies has steadily increased, albeit modestly at the rate of 3.4 per cent in 2015 and 0.6 per cent in 2016, and reports from those active in the market support this.
“There’s definitely more business out there,” says Stackhouse Poland head of healthcare Marcia Reid, adding that her healthcare business has seen annual growth of around 15 per cent for the last few years. “It’s not just insured businesses moving around: I’m seeing more virgin business than I’ve ever seen.”
This is supported by data from the insurers. For example, at Axa PPP Healthcare, 44 per cent of its SME business was virgin in 2017, while at WPA, around 20 to 25 per cent of business comes from previously uninsured companies.
The reasons are simple. Alongside a growing awareness of the organisation’s role in supporting employee health and wellbeing, headlines critical of NHS provision make medical insurance an increasingly attractive benefit. In addition, with auto- enrolment transforming pensions into a given, employers are looking to other benefits to differentiate themselves. “Business leaders are aware they need to take health and wellbeing into account,” says Axa PPP Healthcare director, SME business Paul Moulton. “Employees are an important part of any business and they need to be looked after.”
Going for growth
Whether you’re looking to grow an existing book or add group medical insurance to your portfolio, responding to the change in market dynamics is essential. “The landscape has changed in the last few years,” says Premier Choice Group managing director Claire Ginnelly. “Employers want to talk about the health and wellbeing of their employees, not just medical insurance. There’s nothing wrong with being a specialist but, if you’re only focusing on medical insurance, you could find your client base under threat from consultants with a broader remit.”
A wide range of products and services are now available under the health and wellbeing banner, including traditional group risk products, medical insurance and cash plans right through to fitness challenges, mindfulness and meditation apps and virtual GP services. Additionally, with more companies looking overseas for business, and a growing number of staff needing to travel abroad, international medical insurance plays a part in many healthcare propositions.
It’s also important to talk to the right people. VitalityHealth distribution and sales director Greg Levine explains: “Get beyond procurement and speak to the board,” he says. “They’re the decision makers who will be interested in finding out how they can improve the health profile of their workforce through their healthcare benefits.”
Making the transition from broking to consulting also requires a rethink on the annual renewal process. Rather than looking for a cheaper deal at all costs, it is essential to ensure the proposition offers value. “If you win business on price, you’ll lose it on price too,” Ginnelly explains. “You still need a competitive product but it has to be about meeting the client’s wider health and wellbeing requirements.”
Analysis of the organisation’s health-related data, such as claims and absence figures, can provide
‘GET BEYOND PROCUREMENT AND SPEAK TO THE BOARD.’
this insight, enabling an adviser to fine tune the benefits to address any emerging trends.
Insurers are keen to help. WPA commercial director Mark Southern explains how his firm’s Precision Analytics can support an adviser. “This is a data-led way to assess an organisation’s healthcare benefits. By adjusting benefits, they can see exactly how this might affect the overall performance.”
There’s also an opportunity to learn from the direct sales forces. As an example, WPA’s Healthcare Practice, a team of franchisees selling its health insurance products around the UK, brings in a sizeable part of its new business. “They take time to understand their clients and build bespoke packages that match their requirements,” Southern explains. “Employers don’t always realise they can structure health insurance in such a way that it meets their needs but is also cost- effective.”
Cash plans are a great example of this. These are low cost and as well as potentially being a stepping stone to medical insurance, they can also appeal to younger age groups who don’t always need medical treatment but do value help with the cost of a trip to the dentist or optician.
A number of providers have sections on their websites focusing on how to expand into the group PMI sector. Aviva’s ‘Adding PMI to your business’ site section covers subjects ranging from the basics of what PMI actually is, suitability, what the process of placing business actually entails for the adviser and the difference between individual and corporate products.
The way you are remunerated can also affect your ability to grow your business in this area. Association of Medical Insurers and Intermediaries executive chairman Stuart Scullion is a firm believer in offering clients the option to pay fees instead of commission. “Fees are usually lower than the commission available on medical insurance so you might have to take a cut in income,” he says. “But, it’s much more open and transparent and, in the long-term, the trust you’ll win from clients is worth a lot more than this initial commission uplift.”
While ditching commission may represent a significant step away from the sales role and into consulting, Scullion adds that it’s important to constantly demonstrate the value of the advice you give. “I’ve operated a four strikes contact programme in the past,” he explains. “Depending on the size of the business this might involve two meetings a year plus a couple of newsletters, some marketing advice or a simple phone call. No matter how strong the relationship, you can’t afford to be complacent.”
If it’s still a market that seems too far removed from your current corporate proposition, there are several options you could con- sider. Reid recommends building
a professional connection with an adviser who specialises in healthcare. As an example, her firm accepts introductions to provide advice on a business’s healthcare requirements. “Advisers don’t want to lose the business to an adviser that covers the full range of products, but neither do they want to risk getting it wrong,” she adds.
Insurers are also happy to step in to provide support with arranging a client’s healthcare. As well as setting up a separate support team specifically for local
intermediaries who want to place business themselves, Axa PPP Healthcare is one of the insurers that operates an introducer model. “If an adviser doesn’t want to build their knowledge of the medical insurance market, they can pass on the client’s details and we’ll provide a non-advised sale and remunerate the adviser,” explains Moulton.
Acquiring a business that already specialises in this area is another strategy. This not only helps to plug a gap in your portfolio, but also gives you additional scale to negotiate with insurers. As an example, Aston Scott and Lark merged last summer, creating one of the UK’s top 20 independent brokers and providing clients with access to a broader range of services.
But, whether you’re considering an acquisition to bolster your firm’s medical insurance expertise or you’re looking to develop your own knowledge in this field, with interest growing in employee health and wellbeing, it’s an area that can’t be ignored.
Building a group medical insurance business from scratch can be daunting but most advisers are already sitting on a ready-made client bank according to Premier Choice Group managing director Claire Ginnelly. “Whether you’ve advised them on general insurance or pensions, ask the question about whether they want to do something more than they already are,” she says. “More and more employers are interested in how health and wellbeing can improve their business.” As well as approaching your existing clients, another good source of business is through other professionals such as IFAs, solicitors and accountants.
It is also worth speaking to other advisers in your region who specialise in different areas to set up referral pro- cesses. “All of these professionals could be looking for someone they trust to sup- port their clients’ healthcare requirements,” says Association of Medical Insurers and Intermediaries executive chairman Stuart Scullion. “There’s nothing better than recommended business.”