Peter Bye tells Angela Faherty why FSA regulation and product innovation hold the key to the future of the PMI market
"I am what you call a proper insurance man," says Peter Bye, director of specialist healthcare planning company, The Private Health Partnership (PHP). "And by that I mean I have never had a career, just a series of jobs."
Despite his modesty, Bye has had a remarkable and varied career. After a brief stint as a policeman and a taxi driver, Bye secured a job with Prudential and began to make his way up the rungs of the insurance ladder. Today, as director of a company he co-founded with his business partner Jan Lawson, Bye is happy with his lot.
"For the first two years it was very difficult financially, but then things started to pick up and things are now going extremely well," he says.
Although Bye admits going it alone was initially a struggle, a firm belief in what could be achieved and a clear set of objectives allowed PHP to become a successful business.
"Having worked in the market for some time, I knew about all the scams and how some people were making large amounts of money for very little effort and that made us determined on two things.
"Firstly, that we would finance the company ourselves and not ask insurers for help and secondly, that we would do the job properly," he says.
Determination and a great deal of hard work have ensured the company's success. It now has a total of 12 staff and following a deal with Skipton Building Society in November 2002 – which saw the building society acquire an 85% share of the business – PHP has the potential for further growth.
"The deal with Skipton has helped in that it gives us a distribution network that we did not have before and it also provides us with the option to expand. Ultimately, it also provides Jan and I with an exit route, which was something we never had before. And at 60, that is something I had started to think about," he says.
With the business showing signs of expansion, Bye admits that it will not be long before PHP needs another adviser. He is, however, opposed to the stereotypical image of a salesman that has dogged the industry for so long, and hopes that Financial Services Authority (FSA) regulation in 2005 will help to weed out those not offering good, solid advice.
"The life and pensions industry saw huge upheaval when it fell under regulation and I believe that the general insurance business will go the same way. And that is a good thing.
"Twenty years ago, firms were looking for a salesman, but that is no longer the case because what they need are competent advisers. I think it is only fair that when people buy something, they know exactly where and what it can offer them as well as the advantages and pitfalls," he says.
Bye is confident that FSA regulation will help the market in the long term by setting the foundation for sound advice. He feels consumers are more responsive to advice and seek to be informed rather than sold private medical insurance (PMI) products – particularly as the general perception is that PMI is unaffordable for many people.
"Private medical insurance in its current form is not sustainable in the long term. People will not accept paying premiums that increase by 15% to 20% every year. The difficulty is that clients think if it is unlikely they are unable to afford it and have to pack it in when they are 75, why not pack it in when they are 60 and save themselves some money."
Product innovation is the key to the long term success of the market says Bye, and he is not a man to rest on his laurels. Over the last two years, PHP has been working on a new product that combines investment and insurance to help lower premiums. The solution, aimed at those aged 50 and over, has been designed to incorporate additional services and offers access to Exeter Friendly Society's Go Private scheme, as well as independent care advisory scheme, Red Arc.
It is the additional services included as part of the policy that, according to Bye, make the product one for the future.
"The inclusion of additional services is the way forward for the market," he says.
"Rather than simply looking at benefits, it is important to look at the bigger picture. People need access to services and organisations they can plug into when they need them. The problem with so many insurers is that they have produced policies that they think the public want or that their marketing team can design."
While Bye recognises the need for the next generation of PMI products to be brought to the table, he remains confident that the market can grow. He firmly believes that the future of healthcare provision in the UK lies in greater private and public partnerships and that the general public are becoming increasingly aware of the short- comings of the NHS.
"The political view that the general public love the NHS is absolute rubbish," he says. "They do not care what it is called, they just want to get better and an increasing number are starting to realise that if they do not look after themselves, the Govern- ment isn't going to either."
And what does the future hold for the PMI sector? Bye is sure the individual market will grow. "The demand is out there, it is just about coming up with the right product to satisfy it. The old style product of inpatient, outpatient and all the rest is not going to turn anybody on. The market needs to evolve, the days of a one size fits all product are well and truly gone."
