In an increasingly competitive market, it has become necessary to offer policyholders not just one but a range of insurance products, Claire Ginnelly says
There is much talk in medical circles of the need for a more holistic approach to patient care. Increasingly, there is recognition of how diet, exercise and overall quality of life can play a crucial part in a person's state of health. Providing an isolated treatment may be effective in the short term, but a broader strategy addressing the patient's total requirements is becoming the favoured way to ensure general wellbeing.
Brokers and intermediaries involved in selling health-related and protection-oriented insurance products to commercial clients should adopt a similar approach. While policyholders will derive benefit from having a particular protection-related product, they will be in a much better position if their portfolio extends to private medical insurance (PMI), group travel cover, personal accident, critical illness and beyond.
Benefits
If brokers can progress from selling a limited range of products, there are benefits in terms of boosting income and cementing the client relationship. And every additional product sold reduces the opportunity for a rival to tickle the interest of the client and tempt them away.
Lots of companies - intermediaries and insurers pursuing direct sales to commercial clients - have woken up to the potential of the small to medium-sized enterprise (SME) market. SME firms (those employing between five and 200 people) represent over 95% of the UK business sector. There are 4.3 million such businesses and they have a £5.5bn annual premium spend.
Each of these firms is dependent on the quality and dedication of its staff. Any small business feels the absence of an individual acutely, so they have an interest in products and services that contribute to the development of a workforce that can bounce back from health problems.
In other words, they are receptive to arguments in favour of specialist insurance products such as private medical cover.
How would a business cope if it were to lose a key member of staff through illness? It happens, and the business would soon come to appreciate the flexibility and benefits of a PMI contract.
If at the moment the focus is only on the PMI market then businesses need to consider expanding into other areas both to develop business and to shore up its defence against incursions by other intermediaries with a broader offering.
If other protection lines are sold but not PMI, it is worth contemplating both the lost revenue-earning opportunity and the risk that a specialist PMI broker may attack the client base.
There is also the threat of direct sales. Datamonitor research reveals the direct market accounts for 73% of individual PMI business, while brokers have an equivalent share of the group market. But it is direct sellers which are expanding while intermediaries are under threat. So action is needed to secure relationships with existing clients, let alone establish sources of new business.
Let us not forget that Tesco burst onto the PMI market in January. Its product has a no-claims bonus and can be bought over the telephone, no questions asked (or very few, anyway, and none regarding medical history).
Tesco is not yet targeting the business community with health covers, but who knows the limits to its ambitions? It already has a commercial vehicles product, so it is not out of the question that it may soon be fishing in companies' ponds.
When dealing with commercial clients, remember that the person who signs the cheques is also a private consumer. They will be aware of the direct market for private PMI - chances are they have seen the hullabaloo surrounding Tesco - and they may even be a customer. Brokers must be ready to respond to threats to their commercial relationships, wherever they arise.
One thing is certain - the PMI/personal accident/sickness game for smaller businesses is definitely worth the candle. If a company is not selling it, it should explore the potential. If it has already made a move, perhaps it should leverage the good standing it has with its clients to provide them with advice on a wider range of covers.
In particular, PMI is highly valued by employers and employees alike. Surveys show it to be one of the most prized workplace benefits (second only to pensions), and it is acknowledged to contribute to the smooth running of businesses that would otherwise be crippled by the temporary but prolonged absence of staff.
With PMI in place, employees needing medical attention can be seen faster than may be the case with the NHS and always at a time that is convenient for them and for their employer. Add personal accident and sickness and it looks after their worries about getting paid too.
With PMI in place, an employer can monitor the progress of staff who are absent for medical reasons. This slashes the risk of employees using the opportunity to put their feet up for longer than is necessary.
PMI also boosts morale, especially if cover extends to the employee's family. And happy staff usually means a happy business.
Expansion
If a company is expanding beyond merely selling insurance to providing advice and guidance on risk control, PMI is an essential part of its offer. And just as any decent commercial insurer will provide support on risk management issues, so a good PMI insurer will offer advice on health-related subjects.
The industry should also exploit the value of today's wide range of helplines and employee assistance packages. These can be cost-effective for the client, but also have an attractive remuneration structure that offers valuable non-risk income. This is already big business for direct writers in the general insurance arena; perhaps health specialists could learn from the competition?
Designed properly and sold in conjunction with PMI, these services are not just about getting sick individuals back to work - they are about keeping healthy individuals healthy so that they can keep on working effectively.
Protection business is generally rich with potential. The way the UK economy has changed, leading to the increased emphasis on service provision, means that, more than ever, employers' principal asset is its work force. No legitimate business would dream of operating without adequate insurance for buildings, equipment and stock. Why should it adopt a different attitude to its people?
The message is simply whatever a company's current involvement in selling protection business, it is likely it could sell a lot more, either through its own activity or in collaboration with another intermediary. And there should be a gaggle of eager insurers willing to bolster its efforts.
Intermediaries who specialise in a limited line of products are missing an opportunity to increase sales. Surely it is better to develop a total service proposition that addresses all clients' needs? It must be preferable to be a complete solution provider offering advice, support, product recommendation and claims service across the full gamut of protection policies.
And why stop there? What about cover for buildings, machinery, liabilities, motor risks, business interruption and the like? What about pensions and other financial services? The people who run small businesses rarely distinguish between classes of insurance. They are likely to welcome any approach that streamlines and simplifies their relationship with the insurance market.
There is the all important business relationship - why not use it fully before someone else does?
This is not to suggest that specialism is bad and that every intermediary should become a generalist. Indeed, complex products often demand a dedicated approach. But if IFAs are selling to a company where all the buying decisions are made by an individual - as may be the case with a smaller business - there must be an argument for bringing greater focus to the sales effort.
Methods
This can be done in a number of ways. First, the individual broker can develop knowledge of a broader spread of products. Or additional staff can be trained or recruited to provide the necessary expertise. A simpler and more cost-effective option is to form an alliance with a firm that has expertise in the areas in question.
How that alliance is presented to the client is not important. All clients want is the comfort and security offered by the insurance and value for money. The smoother the buying process, the better.
Greater use should also be made of the energy and expertise of insurers. If a business is weak in a particular class, why not lean on the insurer to bolster its offer? Most offer more than one line of business and it makes sense for them to cross-sell. Seek out an enthusiastic partner.
The insurer should support a company's marketing efforts or, perhaps, "broker" a deal between intermediaries who can combine their strengths.
The crucial point is that cross-selling boosts sales, while keeping the client happy and the competition at bay. The opportunities for growth are there for the taking. But are IFAs ready to take the next step?
Claire Ginnelly is head of business development at Groupama Healthcare
