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.

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.

Exeter Friendly Society has announced a new fixed two-year moratorium, available on their ‘Health Cover for Me’ and ‘Health & Stuff’ plans from July 2010.

The moratorium will be open to new applicants aged 65 or younger, provided they have no history of heart disease, stroke or cancer, nor had a joint replacement.

This is a very significant development in the UK PMI market. Hitherto, PruHealth are the only insurer to have offered a fixed moratorium, with other insurers offering a ‘rolling’ moratorium, whereby excluded conditions only regain eligibility for benefit if they go for a continuous two-year period without presenting symptoms or requiring advice, treatment or medication. With a fixed moratorium, pre-existing conditions are automatically covered after two years, even if they have required treatment in the interim.

When PruHealth introduced their moratorium in late 2004, the broker community speculated as to whether any other insurers would follow suit. In the event, it has taken over five years for another insurer to follow Pru’s lead. This is a statement of intent from Exeter Friendly, who have also joined Bupa and PruHealth in offering industry-leading cancer cover on their newer plans.