PMI: Retailer closes door to new business after only 12 months in the sector
Sainsbury's Bank has closed its private medical insurance (PMI) business to new customers after only a year of operation. The supermarket bank has withdrawn its health cover because "in the current market, the health product requires greater focus and effort than we feel justifiable," according to a company statement. Existing customers will be unaffected by the withdrawal.
Sainsbury's Bank raised eyebrows when it launched into the health insurance sector in March last year as it was the first supermarket bank to do so. While competitors such as Tesco Personal Finance have launched rival motor, home and life assurance products, no other retailers followed Sainsbury's into medical insurance. The withdrawal of the cover has fuelled speculation that the PMI sector has proved resistant to non-advice-based sales.
The supermarket bank was unable to provide an exact figure for how many customers have taken out its health cover, but stressed that it was satisfied with how the product had performed. "Health was always anticipated to achieve lower volumes than other products but we were happy with its progress," said Mark Sim, former health insurance manager at Sainsbury's Bank.
Although American International Group (AIG), underwriters of the retailer's health proposi-tion, refused to comment on the closure, Sim was more forth-coming: "The decision [to close the health business] was a joint one between AIG and Sains-bury's Bank and we still maintain an excellent relationship."
Given that Sainsbury's foray into the health market lasted barely 12 months, Sim fiercely denied that the proposition had been a failure. "That is certainly not what our statement implies. We were pleased with the progress made with health cover."
The development has met with little surprise from advisers, however. "I would say this shows that one-off sales of products such as private medical insurance will not be profitable for supermarkets long-term, as they will only ever be held for the short-term," said Mike Pendergast, IFA at One Group.
"Private medical insurance has to be sold with advice, as other-wise the purchaser may end up with a policy that does not suit his requirements, and will, in all likelihood, look for compensation," added Pendergast.
