The Regency Health Blog

Making the case for PMI brokers to get qualified

Wed, 18 Jan 2012 14:38:00 +0000

My piece in this month’s Health Insurance magazine, encouraging PMI brokers to take up the new ‘Health and Protection’ qualification from the Chartered Insurance Institute.

Click the thumbnail to download the PDF.

Bupa reinstates cover for 34 BMI hospitals

Wed, 18 Jan 2012 13:03:00 +0000

As anticipated in my last post, Bupa has today announced that it will be reinstating cover for 34 BMI hospitals with immediate effect.

The three hospitals that will remain out of Bupa’s network are the BMI Gisburne Park Hospital, BMI Lancaster Hospital and BMI Castle Consulting Suite.

Bupa de-lists 37 BMI hospitals that 'do not represent good value for members'

Tue, 10 Jan 2012 16:41:00 +0000

Today’s Telegraph is carrying an article by Ian Cowie about Bupa removing cover for 37 BMI hospitals from 1 January. This development has understandably caused concern for Bupa policyholders who use, or would want to use, their local BMI hospital. The insurer has stressed, though, that it will continue to cover the de-listed hospitals where patients are in the middle of treatment.

Bupa has come under fire for this strategy but has countered that, if it does not take steps to control costs, already high premiums will eventually become unsustainable. The insurer has said that BMI had requested prices that were ‘over 20 per cent more expensive than at least one other hospital group, despite in our view offering no better quality of service.’

Whatever the merits of this argument, it is disappointing that Bupa’s members and BMI’s patients have been dragged into what has become a very public spat. Negotiations are apparently ongoing and given that the current impasse benefits neither Bupa nor BMI, there is a good chance that the situation will eventually be resolved. Affected Bupa members may therefore wish to wait and see how the situation develops before taking any action.

Choice is a key driver for consumers to take out private medical insurance, so it is a risky strategy for Bupa to de-list the hospitals completely rather than charge an additional premium to cover them. Rival insurers have made hay on the issue of choice, but hospital coverage is only one aspect of a policy’s suitability and may be less important than securing ongoing cover for pre-existing conditions.

At the end of his article, Mr Cowie suggests that this development vindicates cynics who claim that ‘medical insurers of all descriptions are in business to lend out umbrellas - until it starts to rain’. Having assisted hundreds of clients with their claims over the years, this is certainly not my experience of private medical insurers—and especially not of Bupa.

The 37 hospitals are as follows:

BMI Alexandra Hospital

BMI Bath Clinic

BMI Beaumont Hospital

BMI Bishops Wood Hospital

BMI Castle Consulting Centre

BMI Clementine Churchill Hospital

BMI Coombe Wing

BMI Droitwich Spa Hospital

BMI Duchy Hospital

BMI Edgbaston Hospital

BMI Esperance Hospital

BMI Fawkham Manor Hospital

BMI Foscote Hospital

BMI Gisburne Park Hospital

BMI Goring Hall Hospital

BMI Hampshire Clinic

BMI Harbour Hospital

BMI Highfield Hospital

BMI Huddersfield Hospital

BMI Lancaster Hospital

BMI Manor Hospital

BMI McIndoe Surgical Centre

BMI Meriden Hospital

BMI Mount Alvernia Hospital

BMI Oxford Clinic

BMI Paddocks Clinic

BMI Priory Hospital

BMI Princess Margaret Hospital

BMI Runnymede Hospital

BMI Sarum Road Hospital

BMI Sefton Hospital

BMI Shelburne Hospital

BMI Shirley Oaks Hospital

BMI Somerfield Hospital

BMI South Cheshire Private Hospital

BMI Syon Clinic

BMI Woodlands Hospital

PruHealth announces new Vitality benefits

Tue, 15 Nov 2011 23:55:00 +0000

Along with a few hundred other advisers, I attended the Intercontinental hotel on Park Lane yesterday to hear PruHealth announce some enhancements to its ‘Vitality’ concept. In brief, Vitality is a wellness engagement programme that offers rewards to the member while improving the insurer’s claims experience. That’s the theory, anyway.

PruHealth appeared to pull back from the Vitality concept when it withdrew its free gym offer in early 2010, but this refresh once again makes it central to the insurer’s proposition. So much so that CEO Neville Koopowitz made clear at the launch that PruHealth no longer sees itself simply as a private medical insurer, but also as a wellness company.

Whatever advisers think of PruHealth, the insurer cannot be ignored. Even when it had relatively little market share (before the acquisition of Standard Life Healthcare), it set the pace, innovating in a fairly staid market. With the number of PMI subscribers in decline, PruHealth wants to broaden the appeal of the product and provide its members with more than just an insurance policy.

From next year, PruHealth policyholders will have access to a huge number of benefits that include special mobile phone tariffs, discounted holidays and tailored health plans. However, Neville Koopowitz, speaking to Health Insurance Magazine, said, ‘if people just see it as some discounts added to PMI then, quite frankly, they just don’t get it’.

Whether Mr Koopowitz is able to grow the market with this approach remains to be seen. I cannot help but admire PruHealth for its spirit of innovation, but it must be an insurer first and foremost and consumers expect insurers to pay claims before sending them on cheap holidays. As an adviser, the suitability and robustness of the insurance product will always be my primary focus.

Video blog: Moratorium or full medical underwriting?

Wed, 14 Sep 2011 10:52:30 +0100

Simplyhealth to acquire Groupama Healthcare

Wed, 03 Aug 2011 15:27:00 +0100

The wires are abuzz today with news that Simplyhealth has reached agreement to acquire Groupama Healthcare. This news will have come as a surprise to most in the industry, although the recent trend toward consolidation has resulted from market pressures that are all too evident.

In the last year or so, Standard Life Healthcare and PatientChoice have both been acquired (by PruHealth and Westfield Health respectively), AXA PPP has reached agreement to acquire Health-on-line, National Friendly has withdrawn from the PMI market and CIGNA has withdrawn from the SME PMI sector. The landscape of the PMI market has changed dramatically, then, in a little over 12 months.

Although a smaller player, Groupama Healthcare is/was a leading light in the PMI market, with a reputation for delivering excellent service and a key proponent of sharing claims data—a divisive issue. It remains to be seen what of the Groupama ethos will survive the integration, but Simplyhealth has a strong corporate identity and is unlikely to be content with just re-badging products.

Today’s news will have raised a few eyebrows amongst brokers, who will be anxious that there is no further provider consolidation. A diminished number of insurers does not bode well for competition, and whole-of-market brokers need a good spread of providers to prove their worth.

As an individual PMI specialist, today’s news will not directly affect Regency Health, because Groupama competed almost exclusively in the SME sector. I hope that Simplyhealth will be able to accommodate the many good people at Groupama Healthcare.

Video blog: Tips for buying private medical insurance

Mon, 01 Aug 2011 15:59:00 +0100

Which? report on private medical insurance

Fri, 01 Jul 2011 15:07:00 +0100

The consumer association, Which?, has issued its latest report into private medical insurance, which I was asked to review prior to publication. The report is, I think, balanced and informative, and does not make the mistake of trying to offer advice. Instead, it provides a broad overview of the market and should help consumers to make an informed decision.

There are two aspects of the report that are particularly noteworthy. First, the comparison table is, by necessity, littered with so many caveats and qualifications that it illustrates just how difficult it can be to make a reliable comparison of PMI policies. Second, Which? surveyed nearly 3,000 of its members that have PMI and have ranked the eight largest providers for overall customer satisfaction.

The comparison table, below, aptly demonstrates why price comparison sites are not the ideal distribution channel for PMI. Aside from the obvious point that a client’s medical circumstances can sometimes determine the most appropriate recommendation, apparently subtle differences in cover can make a significant difference to the value of a policy.

What is not generally understood by consumers is that the PMI quote engines used by the main comparison sites are operated by brokers, like us, selling the same products at the same prices and earning the same commissions. The only advantage, then, is the convenience of buying online, and whilst some people prefer to buy this way, most would benefit from a discussion with an adviser.

The customer satisfaction survey should be of as much interest to brokers as it is to consumers. To the best of my knowledge, this is the first such survey and the results are more or less as I would have expected, with just a few exceptions. Top spot went to a resurgent Exeter Family Friendly, with CS Healthcare and WPA rounding out the top three.

Brokers differ in the importance that they attach to insurers’ service standards. The primary focus will always be on price and the terms of the contract, but it is in the broker’s best interests to place clients with insurers that settle claims fairly and deal with administrative matters promptly—sometimes, the broker can only be as efficient as the client’s insurer.

Comparison table reproduced with kind permission of Which? Click to enlarge.

Are IFAs and PMI brokers natural allies?

Wed, 11 May 2011 11:25:00 +0100

Cover Magazine recently reported that a small but respected medical insurer has ambitions for its franchisees to establish referral networks of IFAs. Without wishing to rain on that insurer’s parade, it strikes me as unlikely that many IFAs—who tend to value independence above all else—would be willing to refer their clients to a tied agent.

Few IFAs advise on private medical insurance, and those that do tend to dabble rather than specialise. It would therefore seem sensible for IFAs to partner with PMI brokers, in order to provide their clients with access to specialist advice on a product that will often form part of a financial review. PMI brokers are aware of this opportunity and are often keen to establish introducer relationships with IFAs.

The mistake that PMI brokers invariably make is viewing this as a straightforward business arrangement, where the IFA will be motivated to refer clients for financial reward. In my experience, IFAs are primarily motivated to add value for their clients, to be seen as a hub for all matters financial, and to ring-fence their core business in the process. The commission share, whilst gratefully received, is almost incidental.

This puts a different complexion on the IFA-PMI broker relationship and makes cultural compatibility more important than financial reward. Professional standards are far higher in the IFA sector, with the minimum qualification requirement due to be raised further as part of the Retail Distribution Review (RDR). By contrast, there is no qualification requirement for PMI brokers, and, as a result, most do without.

Leaving aside the issues with the RDR, it has arguably prompted the IFA community to re-define itself. A transparent charging structure puts IFAs above the fray and the old-fashioned approach of selling products—still so prevalent in the PMI broking sector—is increasingly frowned upon. IFAs will therefore be naturally cautious about referring if there is a danger that their clients will be sold to, rather than advised.

The biggest challenge to the relationship between IFAs and PMI brokers, however, is that many brokers are now selling life cover and other pure protection products, thus encroaching on traditional IFA territory. This is a legitimate growth strategy for health insurance intermediaries, but it undermines the notion that IFAs and PMI brokers are natural bedfellows. PMI brokers cannot have their cake and eat it.

Reflections on National Friendly and the fixed-price model

Fri, 06 May 2011 13:05:00 +0100

A number of years ago, Exeter Family Friendly (then simply Exeter Friendly) introduced a range of PMI plans that had the unique selling point of age-on-entry pricing. The marketing slogan that Exeter used to promote the product was ‘the age you join is the age you stay’, which provided ongoing reassurance to policyholders that they were not subject to the age-related increases that affect most PMI policies.

The scheme is now closed to new members but existing members continue to enjoy this benefit and are very loyal toward their insurer as a result. Policyholders do still see annual increases for medical inflation and these can be reasonably substantial, but still less than is customary. The downside is that the policies are subject to stringent financial limits on cancer treatment and it is this, I assume, that sustains the age-on-entry pricing.

I mention this only to illustrate the problem that the PMI market has with annual increases and the difficulty of overcoming this problem. Medical inflation is rampant and this is the primary reason—aside from age—why PMI policies are subject to annual increases well in excess of general inflation. Consumers buying PMI need to be made aware of this fact so that their expectations are set accordingly.

When National Friendly (then National Deposit) introduced its ‘Healthcare Deposit Account’, the USP was that premiums were fixed for life (later changed to five years). Naturally, this had tremendous appeal to consumers, especially those who had experienced significant annual increases. This was not traditional PMI, though: the flip-side of the fixed premiums was that members had to contribute a percentage of their claims and were subject to overall financial limits.

Predictably, the fixed-price model (whether for life or for five years) has proved to be unsustainable, despite the aforementioned controls. Whatever the appeal of fixed premiums, it is self-evident that they will not be viable in a market with high inflation. For consumers, National Friendly withdrawing from the PMI market reinforces the old adage that, if something seems too good to be true, it probably is.

For the PMI broking community, the National Friendly debacle is a lesson learned. Those brokers who recommended the original product will have had the unenviable task of apprising their clients of the recently announced changes. It is impossible to make a future-proof recommendation when advising on a product that is usually an annually renewable contract, but, nonetheless, brokers should be critically engaged with the products that they are selling.

The increasing popularity of modular PMI plans

Fri, 15 Apr 2011 11:03:00 +0100

I whiled away an hour in a Cheltenham pub last week with Andrew Sandilands, business development manager at Freedom Healthnet and a veteran of the PMI industry. Andrew was keen to talk to me about Freedom’s new ‘Elite’ plan, which is PMI in the traditional sense and therefore marks a departure from the approach that the insurer is known for, which it describes as ‘hybrid cashplan health insurance’.

The Elite plan is a modular product, comprised of a core component and six optional modules. The plan design is sound and the product is reasonably competitive; it strikes me as the sort of policy that will be recommended when a client has very specific circumstances or requirements. In particular, it may be suitable for large families because any number of children are charged at a fixed percentage of their parents’ premium.

Modular plans are becoming more popular as insurers look to offer choice to consumers and flexibility to brokers. PruHealth opted for modularity when it restructured its product range last month and at least one other insurer will be bringing a modular plan to market this year. Market leaders Bupa and AXA PPP have yet to embrace the concept in the individual market, although the latter distribute a modular product through Health-on-line. Aviva offer what is essentially a modular product but conceptually more sophisticated, in my view.

I am largely indifferent to modularity: a policy will meet with my recommendation if it is contractually sound and best meets the client’s requirements, regardless of how it is structured. Modular plans nearly always resolve into something resembling a fixed product anyway, so it makes little practical difference.

My one reservation with modular plans is that the ‘Key Facts’ documents are often confusing for consumers, because they simply list all of the available options. This is less of an issue with an intermediated sale, because it is incumbent upon the broker to draw the client’s attention to the main benefits and limitations of the plan. Nonetheless, the policy summary should still provide an overview of the plan benefits without the client having to refer to supplementary material.

Insurers could solve this problem by producing Key Facts documents with check-boxes next to the various modules so that the broker or direct salesperson can indicate more clearly to the client how the policy has been configured. Policy summaries are often sent by email or self-printed by the broker house, so they could be provided in editable PDF format for this purpose. Expect to see more modular plans as insurers refresh their product ranges.

National Friendly withdraws from PMI market

Tue, 05 Apr 2011 15:30:00 +0100

In a not entirely unexpected development, National Friendly (formerly National Deposit) has announced that it will be pulling out of the PMI market as of five o’clock this evening. This follows some unpalatable changes to existing policies that I wrote about here back in January and affects both National Friendly’s own-branded products and policies marketed under the Healthguard name.

National Friendly has indicated that all existing plans will continue on the same terms, which should provide some reassurance to existing policyholders. However, given recent developments and the contractual scope for further changes, those concerned should seek advice from a suitably qualified independent broker.

I was not a proponent of National Friendly’s PMI products but, nonetheless, I consider its withdrawal to represent a loss to the market. This further narrowing of the field weakens the individual PMI market, in particular, which is already suffering from a paucity of good products. I shall elaborate on this concern in a future post.

Regency Health clients will be unaffected by this development.

Bupa's PR own-goal on cancer cover

Wed, 30 Mar 2011 23:42:00 +0100

Last week, Bupa announced that it would no longer sell plans that imposed limits on cancer treatment. This headline caused some consternation among Bupa policyholders, many of whom were told when they took out their plans that Bupa provided industry-leading cancer cover without financial or time limits on treatment.

To clarify, the limits that have now been removed only applied to corporate plans, not SME or individual policies. The key point that seems to have been missed in most of the reporting on this story is that the benefit limits applied to all treatment, not just treatment for cancer (props to Health Insurance magazine for noting this).

In December 2009, Bupa introduced an option whereby corporates could control cost by specifying an annual limit for their employees, typically £25k or £50k. The insurer soon found, though, that these limits were often insufficient for members being treated for cancer, which was at odds with Bupa’s long-standing ethos of covering cancer in full at every stage of the illness.

Effectively, Bupa has taken the decision that it would rather not compromise its principles on cancer care for the sake of competing in a cost-conscious area of the market. Cancer is an emotive topic and insurers can tarnish their reputations by withdrawing cover for cancer at a critical stage of the illness, even where contractual limitations have been pre-agreed.

This development re-unifies Bupa’s cancer offering and marks the provider out as the only insurer to offer full cover for cancer (including palliative care) across its entire product range. This says much about Bupa’s philosophy and would, with better PR, have made for a powerful marketing message. Instead, it appeared as though the market leader was playing catch-up with its competitors.

ECJ bans gender-based pricing

Tue, 01 Mar 2011 10:51:00 +0000

The wires are buzzing this morning with news that the European Court of Justice has, as anticipated, outlawed the use of gender as a variable for actuaries to set insurance premiums.

The ruling will not apply immediately (or retrospectively) as had been feared, but from 21 December 2012, giving insurers adequate time to update their pricing and systems.

Some PMI insurers will be required to equalise their prices, but the overall effect on the market will be slight, because most insurers do not price on gender. Financial protection products such as life and income protection insurance will be more significantly affected.

Lest anyone think that this development will actually benefit consumers, insurers will have to increase their premiums to comply with the legislation, pricing some people out of the market.

Update: PruHealth, one of the two PMI insurers to price on gender, has announced that it will be equalising its prices from 1 April 2011.

Moneywise article: Hammered by medical insurance

Sat, 26 Feb 2011 15:38:00 +0000

Article in the March 2011 edition of Moneywise magazine, to which we contributed a case study. I’ve not provided a copy of the article for copyright reasons, but the gist of the piece is that no-claims discounts on PMI policies are bad news and should be avoided.

I am not opposed in principle to no-claims discounts on PMI policies: where used sensibly, they can help to keep premiums competitive. What concerns me is that the discounts are often stacked in favour of the insurer, which can obfuscate the true cost of a policy.

In my June 2010 article for Health Insurance magazine, I argued for a more progressive approach to the no-claims discount, with a proportionate loss of discount that would more directly reflect the value of the claim(s). The mechanism used by most insurers, where a £100 claim results in the same loss of discount as a £100,000 claim, is a blunt instrument.

Clients are generally accepting of higher-than-normal increases following a year of high claims, and do not expect to pay the same as those who have not claimed. The problem is that the financial penalty for claiming is often so severe that it can render the policy unaffordable at a time when the cover is most needed.

This has the potential to undermine the value of PMI for consumers, something that I’ll address more comprehensively in a future post.

In praise of Aviva

Fri, 11 Feb 2011 17:01:00 +0000

We were recently approached by a client of Aviva who had moved his wife to another insurer at last renewal but forgotten to remove her from his policy. Thus, without realising, the client had been paying two lots of premium for his wife over the past year, amounting to an over-payment of more than £3,000.

We made a case to Aviva, supported by the membership certificate from the new insurer. Extraordinarily, Aviva have agreed to refund the wife’s premiums for the year, despite being under no obligation to do so, and despite the husband having made a claim against the policy.

Insurance companies get a bad rap and sometimes with justification, but credit where credit’s due—well done Aviva.

National Friendly moves the goalposts

Tue, 25 Jan 2011 12:37:00 +0000

The insurer National Friendly (formerly National Deposit) has announced some changes to its original ‘Healthcare Deposit Account’ plan, which will take effect from 14 March 2011.

Previously, individual policyholders under 65 were expected to contribute 10 per cent toward their treatment costs, while those aged 65 and over were expected to contribute 25 per cent. These contributions, dubbed ‘Own Share’, have now been increased to 25 and 40 per cent respectively. Contributions for couples and families have also been significantly increased.

The Own Share contributions are intended to be funded from the policyholder’s deposit account, into which 50 per cent of the premium is paid. Members who need to claim may now find that the balance of their deposit account is insufficient and needs topping-up. Affected policies are those taken out prior to February 2010 with membership numbers prefixed HC2.

National Friendly is offering a transfer to its new plan, which maintains the previous Own Share percentages. The new product is markedly different, however: only 25 per cent of the premium is paid into the deposit account and premiums are fixed for five years, rather than for life—a key selling point of the original plan. Dental and optical benefits have also been removed.

In National Friendly’s favour, the policy wording does clearly state that the Own Share percentages ‘are not fixed forever’ and that they may be changed in exceptional circumstances. Those exceptional circumstances would have been foreseeable, though, so barely two months’ notice is less than ideal—especially for those in the midst of a claim. Affected policyholders should discuss the changes with their adviser.

For the record, we always felt that the original product was unsustainable and therefore declined to recommend it.

PruHealth withdraws fixed moratorium

Wed, 19 Jan 2011 23:56:00 +0000

As part of a raft of product changes, PruHealth has announced today that it will be withdrawing its fixed moratorium from 28 February 2011. From 1 March, the insurer will be moving to a standard ‘rolling’ moratorium (see my earlier post for definitions), leaving Exeter Family Friendly as the only insurer to offer the fixed variant.

This is significant for the individual PMI market because a fixed moratorium is the only way that an adviser can ultimately guarantee cover for pre-existing conditions. PruHealth’s moratorium was therefore a very useful tool in the adviser’s armoury and its withdrawal will make it more difficult to place clients with adverse medical histories.

In other developments, PruHealth has also announced that its new range of policies will not be subject to ‘fee maxima’ (where the insurer will only pay what is customary and reasonable for any given procedure). Most PMI policies are subject to fee maxima, which can lead to shortfalls where the consultant and/or anaesthetist charge outside of guidelines.

The issue of fee guidelines is something that’s attracting a fair bit of attention at the moment, so I’ll address it in more detail in a future post. For now, suffice it to say that PruHealth’s abandonment of fee maxima is a welcome development.

Regency Health named Best Individual PMI Intermediary

Wed, 27 Oct 2010 10:55:00 +0100

Press release:

Cheltenham-based medical insurance specialist Regency Health took one of the top prizes at last Thursday’s prestigious Health Insurance Awards. The company won the award for Best Individual Medical Insurance Intermediary, presented by television personality Patrick Kielty.

The panel of eight judges acknowledged the quality of advice provided by Regency Health, the company’s extensive knowledge of the market and a commitment to working in the best interests of its clients.

Brian Walters, principal of Regency Health, commented, “I’m delighted that we’ve been recognised for our expertise and integrity; the award provides us with another quality benchmark. This is a real achievement for a small independent brokerage—the roll-call of past winners sets a very high bar.”

Regency Health advises individuals and small businesses on new and existing medical insurance policies. Now in their 13th year, the Health Insurance Awards are the most coveted in the sector. The awards ceremony, attended by over 800 guests, was held on 21 October at the Grosvenor House Hotel in Mayfair.

Brian Walters (left) collecting the award from Patrick Kielty

Full medical underwriting or moratorium underwriting? (Part 2)

Tue, 14 Sep 2010 09:15:00 +0100

In part 1, I outlined the differences between these two forms of underwriting; here, I discuss the merits and drawbacks of each approach.

The advantage of moratorium underwriting is that it provides the opportunity for pre-existing conditions to regain eligibility for benefit. It also expedites the application process, because the applicant does not need to declare their medical history and because there is no requirement for an underwriter to review the application. Instead, the member is underwritten at the point of claim: to verify that the condition is eligible for benefit, the insurer will request the claimant’s medical records. This presents a further benefit to both parties in that there is no possibility of non-disclosure.

The Office of Fair Trading has been critical of moratorium underwriting; back in 1996, it even went so far as to recommend that it be banned. The moratorium approach has drawn criticism for a number of reasons. First, it is a reasonably complex clause that demands engagement from the consumer and a careful and precise explanation from the salesperson or adviser. Second, any medical exclusions are not made explicit on the certificate of insurance, as they would be with full medical underwriting (FMU). Third, there is a danger that policyholders might forego medical treatment in order to gain cover for their pre-existing conditions, and this should always be cautioned against.

Some advisers default to the moratorium because it is quicker and easier, but the correct approach is to use FMU as a starting point and utilise the moratorium only where it affords an underwriting advantage. An FMU enrolment has the advantage that the client will not be inconvenienced at the point of claim and can also serve the useful purpose of capturing medical information that the client might not otherwise have disclosed during the adviser’s Fact Find. There is also scope for underwriting discretion with an FMU application: some insurers will take a view on certain conditions—controlled high blood pressure, for example—that would likely be excluded in perpetuity under a moratorium.