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
Reynolds is one of those who would have liked to see its reach expanded. “We’ve played an active part and think its absolutely the right thing to do – to look at the market, the barriers to entry and ask ‘Is it dominated by one or two big players?’
“We were here ten years ago and the OFT did nothing. This time round, they seem to have the bit between their teeth. Aviva tries to consult with practitioners, then try to shape changes to referral patterns and treatment programmes''.
“Going head-to-head into conflict, you can get some short-term gains, but not in the long term. So we’ve chosen to have dialogue rather than conflict,” he added.
These thoughts are similar to those expressed by Alistair Sclare, head of healthcare at Groupama, who also hoped the OFT would take a look at the private medical insurance market alone.
“They’ve chosen not to,” he said. “But the knock-on effect, depending what decisions they make, could very easily have quite a significant impact on insured healthcare''.
“The OFT is looking at some fairly serious points of contention between consultants, hospitals and particularly the larger insurers, and its decisions could affect that quite considerably''.
It would be very wise for the OFT to encourage both parties to come together and talk because having what are, in effect, contract negotiations in the arena of OFT is not particularly good for the market, regardless of who has driven it there.
“One can’t help but think that the fact that it’s there is a failure within the process somewhere,” he added.
The lack of new entrants to the market over the last ten to 15 years appears to be a key deciding factor for many that a review is long overdue.
“The market for PMI insurers has quite significantly reduced and, with the exception of PruHealth, no new player has established itself. To us, that describes a market which at its absolute best is stagnant and in reality probably contracting quite significantly,” Sclare added.
For Debbie Kleiner-Gaines, managing director of Best Health UK and treasurer of the Association of Medical Insurance Intermediaries (AMII), the problem she faces is dealing with very small schemes, usually those consisting of ten employees or less.
It is an area of the market that has been under-appreciated and under-developed by insurers. Although she does appreciate insurers need to run it as a commercial offering, the restrictions mean she is often left struggling to place business.
“Insurers don’t really want that business and small groups do not have enough options any more, so that end of the market needs to be stimulated,” she said.
“We’re starting to feel that we have to almost retirement plan for our small groups if members are in their 60s.
“People are feeling quite abandoned having been with that provider all their lives and then when they reach 70 and are still dabbling in work, insurers are pricing them out of the PMI industry altogether.
As our duty of care, we owe them to be able to continue coverage into their 70s when they actually need it,” she added.
This leads onto another issue still plaguing the industry: the clarity around claims and premium increases for smaller schemes. Despite being continually raised by brokers in one forum or another, it appears there is little appetite among many providers to supply similar levels of claims data to that in the large corporate arena.
Kleiner-Gaines confirmed it is an issue frequently approached at AMII board level and also felt on the ground, leaving intermediaries feeling piggy-in-the-middle as clients say they have not claimed while insurers report the claims loss ratio as something else.
Industry changes
In the May issue of COVER, Groupama’s Sclare made the case for an industry-wide renewals portal to be introduced.
However, Kleiner-Gaines noted the service provided by Insurance Resource did most of what was suggested. While this may have solved one of the industry’s problems already, there are three others she wishes will be addressed soon.
“I’m hoping there will be some new entrants to the market – someone like Legal & General – because what worries us most is a lack of competition and our reviews are getting thinner and thinner''.
“I also hope PruHealth does not increase the direct sales force it inherited from Standard Life and that they go down the route that Aviva and Bupa have done by getting rid of their direct sales force''.
“Finally I’d like more transparency on things like no claims discounts and even cancer as some insurers are still poor at explaining their cancer options,” she concluded.
A significant wish list, indeed, and one that is likely to be familiar to many brokers servicing the sector.
Keep those fingers crossed.
