Group PMI - Wishful thinking

The reform of the NHS is dominating many discussions in private healthcare circles, but Owain Thomas unearths another government initiative that could have a greater impact

Genies are wonderful companions to have. Their lamps are easily transportable and one swift polish summons them to save the day.

But given three wishes, what would you request? For the group private medical insurance (PMI) sector, a booming economy, near-full employment and a government directing employers to the private sector to address both their duty of care and absence management requirements would be top of the list.

Well, while two of those may be still some way off, the third may not be so fanciful.
But with the present stagnant market situation resulting in significant churn yet very little new business, we could be forgiven for taking that suggestion with a pinch of salt.

For Elliott Silk, director of employee benefits at English Mutual Financial Planning, it has been a steady year, although he maintains some gripes with its current operation, chief among them the speed of delivering renewal quotes.

THE TROUBLE WITH TURNAROUND

Silk explained the slow turnaround times of some providers was having a knock-on effect with his clients.

This situation is exacerbated with small-to-medium enterprises, where renewal terms from existing insurers are frequently offered only six weeks before renewal date.

This aside, he is fairly optimistic about the current state of the market and its prospects for growth “We’ve not had any clients withdrawing or limiting PMI benefits, but what we also haven’t seen is companies who don’t have it dipping into their pockets to add it,” Silk said. “It’s difficult because a lot of renewal quotes are seeing double digit percentage increases, which providers say is due to medical inflation, but I’m positive about the possibility of the market expanding''.

“The general public, including employers, is seeing Iain Duncan Smith and the Department of Work and Pensions (DWP) restricting state benefits and is beginning to see the benefit of private provision,” he added.

It seems that getting someone back at their desk quicker without waiting for the NHS is beginning to strike a chord with bosses. Particularly so when they are reminded that if an employee is off work for a physical condition, the resulting financial pressures can quite quickly turn to a mental condition, such as depression, thus prolonging the absence.

As Silk confirmed, employers are beginning to grasp that PMI can be used as an absence management tool.

“With the added difficulty of being able to qualify for Employment and Support Allowance, employers are seeing the first strains of that on their workforce, as people find it more difficult to make a successful claim,” he continued.

“So we’re looking at more detailed comprehensive solutions – not just group income protection, but also how PMI works with it as well. We bring it up in our discussions and they are taking it on board, particularly where companies have gone through restructuring in the past few years and are working on a minimal head count.”

It is encouraging to see that insurers are also aware of the present coalition interest in private sector provision of previously offered state support.

With both sides of the market actively addressing the potential role it can play supporting employers and government, there appears to be genuine hope for the future.

Neil Reynolds, head of intermediary sales at Aviva Health, is predicting a flat market over the next six to 12 months. But he is more hopeful about a possible change in government direction which could push it to another level.

“We’re waiting to see the big sickness and absence review, and in some papers there’s speculation that the government will say the time is right to give companies tax breaks if they put an absence management programme in place,” he said.
“So there could be some growth coming into the market if the government decides to adopt what comes out of review.

“At a recent customer forum we ran, all the employers were interested into looking at this and said that tax breaks would prompt them to take action for their employees.

“The DWP seems to be taking it very seriously, so at this point we are cautiously optimistic,” he added.

Impact of the oft

Another key development affecting the sector is the Office of Fair Trading’s (OFT) review of the private healthcare sector. While the scope of this inquiry has not spread as far as many had hoped it would when first announced, it is approaching some of the most contentious issues affecting the market: using consultant networks and fee schedules.