While demand for private health cover may be stabilising overall, ‘very difficult times' are predicted for individual policies. Nicolas Culley finds innovation and customer service are key in fighting the channel's decline.
Chief executive Kevin Amphlett said the firm, despite the “gloomy” economic climate and tough PMI market, needed to “buck the trend” by relying on a strategy of “continued growth as the best defence against recessionary pressures”.
Growth vital for survival
He said: “Growth is absolutely vital for survival. The lapse rates running the way they are for PMI, especially individual, means broker businesses are shrinking and going out of business.
“It is crucial to be moving forward and not just sitting and waiting for things to improve.
“There is a tendency among some of the broker firms to adopt vocational roles. They tend to be very PMI-product focused but not always on key disciplines which is essential especially given the current climate.”
Amphlett said customer service was “absolutely critical”. The firm launched a rewards scheme in response to the dipping market.
For example, each of its clients receives a rewards card which could entitle them to money off fuel or shopping. Amphlett said it added value and helped keep clients sticky to retain high retention levels.
He echoed Bupa’s struggles with increasing costs of organic growth.
He said: “Organic growth is much more expensive to achieve at the moment. Internet business in particular is proving much more expensive; like online lead generation.”
Chase Templeton acquires broker firms of all shapes and sizes. But Amphlett said the ever-increasing costs of regulation and the aging population meant smaller firms were being hit the worst.
He said: “Market share is a big driver of growth. New business acquisition and organic costs have definitely gone up and are difficult to achieve with current recessionary pressures. In terms of those firms that are selling individual PMI it comes back to the pressures on their bottom line.
Regulation a burden
“Increased regulation is becoming more and more of a heavy burden and lapse rates are increasing. I honestly believe that the major increase of lapse rates is price. We are retaining 90% of our annual renewal whereas it used to be 95% and above.”
Healthcare insurerPruHealth noted some time ago that there was demand to promote beyond its network of specialist brokers. It has ramped up integration with sister PruProtect to make the most of its sprawling IFA network.
