Consumers and businesses are looking ahead to 2010 with a degree of optimism, and this positive thinking is also alive and well within the broker profession.
Times are changing and, as sales pick up, businesses will begin to invest in employee benefits again, thus offering new sales opportunities for intermediaries.
When it comes to levels of optimism, size matters; a recent global survey, undertaken by Regus, polling more than 11,000 respondents about their company’s financial performance, as well as their expectations for personal and nationwide economic recovery, found that over 60% of British small to medium enterprises (SMEs) expect to see their revenues increase in 2010, compared with only 55% of larger companies.
As ‘economic recovery’ replaces the dreaded ‘credit crunch’ as the buzz words of the business media, organisations will be looking towards the future with cautious spending at the forefront of their thinking. Brokers need to be aware that the new, more vigilant buyers of private medical insurance (PMI) will not be spending as freely as before and will be looking for products that satisfy and reassure their guarded thinking and truly offer value for money.
Thousands of businesses across the country have undergone restructuring after crumbling under the pressure of the economic downturn. New SME companies have been created from the fragments of larger organisations and individuals who have been made redundant have decided to set up business on their own. As a result, there is a new group of SME companies, comprising of employers and employees who understand and value benefits such as PMI, for brokers to engage with and sell to.
Streamlining operations
Over the last 12 months, many companies have taken the decision to streamline operations and work with a reduced number of core employees – resulting in increasing workloads and heightened pressure on the remaining workforce. Sickness and health problems that cause employee absence are now, more than ever, having greater and increasingly significant repercussions for employers, as there are no reinforcements available.
This brings us to one of the fundamental points SME companies must consider throughout 2010 – the importance of retaining and protecting core workers that have helped their business through a testing economical period and have the skills and capabilities to grow the business as the country moves out of recession.
The advantages of having employees promptly back to work after periods of sickness are invaluable to a business looking to work with a minimal workforce and PMI provision is an effective way to help make this happen. A comprehensive PMI policy will see employees benefit from reduced waiting times for appointments, a quicker diagnosis and fast treatment. Providing for staff in this way promotes and maintains motivation and commitment within the workforce, as it demonstrates that their employer is prepared to invest in their wellbeing.
Legal obligations
The provision of PMI also brings into focus the fact that every employer has a legal obligation to ensure, as far as possible, the health, safety and welfare of employees while at work – otherwise known as duty of care. Duty of care means that companies are required by law to comply with a series of legal guidelines, some of which are developed and managed by the UK Health and Safety Executive (HSE).
Complying with health regulations, such as preventing risks to health and providing health supervision, is part of the employer’s responsibility regardless of the economic climate. Providing PMI for a workforce helps to take this responsibility one step further and proves to employees that their company is prepared to go that bit further when it comes to providing for its staff and it communicates positive messages to employees when it comes to a company’s attitude to their health.
While it is easy to comment on economic trends in hindsight, it is becoming clear that not all companies are simply cutting employee benefits as a way of saving money. Instead, some SMEs are focusing on the smaller details and reassessing where they spend their money, looking to get value for every penny spent.
Brokers need to embrace this attitude and must work hard to ensure that they are educating customers that PMI is not, as can sometimes be perceived, a luxury product. PMI can be affordable and this needs to be clearly communicated when selling PMI, especially within a time of reduced spending and budgets. It goes without saying that choosing the best-fit as well as best value products to sell to customers is a vital part of conveying this message and in promoting customer loyalty.
Brokers also need to convey to SMEs that as well as being something that can be affordable, PMI is one of the most valued benefits by employees after company pensions. Employers too, value the benefit of PMI and this high regard for PMI is not something that will be swayed by the recession, therefore it will still continue to be an attractive, sellable benefit for brokers.
everyday benefits
Employers often consider purchasing PMI for senior employees only and not covering their entire workforce as it can be seen as a more ‘elite’ perk. However, there are policies available that, for a similar price, can cover all employees and that have added features, such as optical and dental cover. These products ensure that all employees are able to access everyday benefits and can present employers with a more comprehensive product where value for money is visible from day one.
The recession has taught businesses to demand more from PMI providers, more than just cash savings. People feel they rightfully deserve the best product for the smallest price and are willing to shop around more to find them. The pressure is on for providers to develop more innovative products that truly offer value for money and meet the expectations of buyers.
As companies move towards the end of 2010, many will be looking to begin recruiting again and the PMI benefit will be invaluable in this recruitment process, it represents a quality and high end company package, helping to attract the highest calibre of candidate for the position.
PMI policies that incorporate fixed rate premiums into their pricing represent a sustainable benefit option that will be attractive to most employers. Fixed premiums reassure companies that their policy will not suddenly increase in price, leaving them with little option but to cancel the benefit. Cost certainty also allows them to budget accordingly and in a time when profit margins are tight, costs that can be planned for are highly preferable over costs that are unpredictable and almost certainly likely to increase each year.
While companies are looking towards more profitable times, collectively the country is still apprehensive as the speed of growth and recovery remains uncertain. Brokers should be offering companies products that are flexible and can mirror changes in business, whether these changes are for the better or worse. Products that allow businesses to increase or decrease their monthly premium at any time and therefore change the level of cover their employees are entitled to, will have great appeal for employers.
National Friendly has developed an affordable and valuable product that is different to traditional PMI, offering businesses additional reasons to invest. Offering fixed rate premiums and including dental and optical cover within the policy, it is an example of a product that will appeal to SMEs, despite the predicted ‘cautious’ market conditions.
In the months to come, brokers need to have a complete understanding of the mindset of their SME clients. Yes they will be cautious, but many will be looking towards 2010 with optimism and a greater degree of wisdom born from survival. As employers look to purchase PMI, brokers need to ensure they are promoting products that not only meet the company requirements for the present but will stand the test of time and can be adapted when needed.
PMI is an affordable and valuable asset to a SME’s employment offering and it is vital that these messages are conveyed to businesses by brokers, in successfully doing so they too will be able to see a more profitable 2010.
Ian Talbot is head of intermediary and third party distribution at National Friendly
