Individual PMI: A testing experiment

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With the medical insurance sector in a state of flux, Owain Thomas dons the white coat and protective glasses to scientifically investigate the issues.

“I sympathise with the situation, but we’ve been on a very steady model for years where we underwrite people upfront,” he said.

“They know what they are covered for going forward and anything in the background the NHS will cover, or maybe they’re healthy and don’t have any exclusions. But they know that going forward, they are not going to be hit with any unexpected premium rises if they are unlucky enough to claim.”

WPA has made this change to full medical underwriting (FMU) over the last few years.

While it was initially slow going, Southern said brokers and clients were now beginning to see value in this approach.

“In the last six to ten months, we’re having intermediaries saying they can work with FMU,” he continued.

“I think people are looking to spend their money a lot more wisely. Where they can underwrite and feel it’s not such a big issue, they are happy to do so to get a reduced premium.

“The challenge we’ve got is making sure whatever insurers produce compliments the NHS. We need to be very flexible and come up with something that’s going to work with its future,” he added.

One way to help address that credibility issue for the market may be the adoption of publishing claims statistics, as is commonly done in the protection arena.

Universal Provident became the first medical insurer to publish its claims statistics this summer.

While it brings into focus the problems of finding a common way to report such figures, Southern was not adverse to the possibility and felt it could boost consumer confidence by increasing transparency.

“We wouldn’t be too bothered about that,” he said.  “Being a non-profit organisation, we charge what we need to charge to cover our claims on an annual basis and it would be good for the consumer.

“For those who are interested in looking at it and feel they may not be getting value for money – or may be paying out more than they possibly should – it could be good for them and consumer power in general,” he added.

If, as seems possible, NHS provision starts moving towards a more restricted approach with customers topping up with insurance options, anything the industry can do to boost its image will be welcome.

It already has a strong position with low Financial Ombudsman Service complaints, but anything that gives a customer the opportunity to scrutinise and investigate their decision on which provider to select is likely to be positive.

With that choice coming in comparison to a national institution such as the NHS, it is even more crucial for the market to prove open to inspection, and that it can be a successful and efficient supplement to state care. 

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