Raising the barrier

The private medical insurance (PMI) market has experienced some upheaval over the last few years. While sales in the corporate sector have increased, the individual market has gradually declined as customers find they are unable to foot the cost of rising premiums.

Looking to address the issue, providers have, over the past few years, begun to develop policies to make PMI a more attractive proposition to customers.

Budget plans have been introduced offering less comprehensive cover for a lower premium, providing customers with core elements of cover at the best available price. Similarly, a flurry of additional complimentary services such as GP and medical helplines and health websites has arisen to cater to rising demand for health and wellbeing information among customers.

While adapting the PMI proposition to suit the ever-changing needs of the public shows insurers feel a need to provide something more to buyers; a question mark remains as to whether they offer a valuable service, or even if they are well utilised. It also raises the question as to whether such initiatives actually help to solve the problems facing the PMI market, and if the money spent on developing such facilities would be better spent elsewhere.

A new image

While insurers stress the cost of running these facilities is quite low, Adrian Norris, managing director at Buck & Willis Healthcare, believes customers are looking for stripped-down cover at the lowest possible cost and doubts add-on services provide the solution to the industry's problems.

'Private medical insurance needs a radical new approach. It has not changed in 20 years other than around the edges, which means these new services are still bolted to an out- of-date service. It is little more than window dressing,' he says.

Health websites and helplines offering medical, health and lifestyle advice are the main complimentary services infiltrating the market. Some of the market's biggest players, such as BUPA, AXA PPP healthcare, Norwich Union Healthcare (NUH) and Standard Life Healthcare (SLH), have introduced these services to their PMI propositions, and defiantly defend the value add-on facilities present to customers.

Jack Briggs, head of intermediary sales at NUH, says demand for complimentary services is rising. 'GP phonelines and health websites are becoming more and more important to consumers. People should not only get the benefit of private medical insurance when they are ill ' there should be something available for those not making a claim. With these additional services we are trying to promote general wellbeing and raise customer awareness,' he says.

Promoting healthy living and wellbeing are key to the extra value services offered by NUH. The provider offers a web-based facility called Personal Health Manager (PHM) across its individual portfolio and hopes to roll this out to its Solutions and Optimum corporate clients by the end of May this year.

Comprised of four elements, PHM offers symptoms assessment, a health planner, a medical encyclopedia and a GP helpline. The symptoms assessment service probes the user by asking a series of questions in order to determine what treatment may be needed, the seriousness of the ailment and whether a GP consultation is required. The health planner offers a lifestyle evaluation to all those who enter details of their personal habits, such as smoking, exercise and eating habits. The planner then calculates the individual's potential risk to certain medical conditions.

For those customers wishing to gain a greater understanding of a medical condition, there is a medical encyclopedia and the GP phoneline is available to address any further medical worries they may have.

Briggs is keen to highlight the lack of understanding among advisers about such facilities and suggests greater awareness is needed surrounding the benefits these services offer to consumers.

'I do not think advisers appreciate fully the difference between each provider's helplines. GP phonelines are unique and differ from medical helplines staffed by nurses. Understanding the difference in terms of quality between a nurse and an actual GP is vital,' he says.

AXA PPP healthcare also offers a telephone service called Health at Hand, which provides health and medical information and counselling services to customers.

The service is also supported online and although it is not staffed by GPs, Nye Jones, distribution development manager at AXA PPP healthcare, says it offers peace of mind to those who need it most.

'Health at Hand is staffed by registered nurses, midwives, pharmacists and counsellors with a wealth of experience in their respective fields. They are there to give callers sufficient and accurate information on what they are calling about ' whether it is a stress- related concern, or a medical condition,' he says.

PPP's closest rival BUPA also runs a 24-hour health phoneline offering nurse access and medical information to its members as well as a website featuring information on dietary and fitness issues. In addition it also provides a complimentary facilitation service to PMI members offering information on treatments not covered under its standard policy.

Joanna Caparn, head of personal sales at BUPA, explains. 'The service is manned by nurses and helps members to manage their care and explains self-pay options of treatments for which they are not covered. Our health lines are well used and if something is beneficial to members, then we are always keen to provide other services,' she says.

Like NUH, SLH also offers a GP advice line where consumers call to make an appointment and a GP calls them back at a more suitable time for a consultation. However, SLH is keen to stress the service is complimentary to the client's GP, and should not be considered a replacement.

'The service is not meant to replace visits to a GP surgery,' says Matt Foster, product development manager at SLH. 'It's an added bonus for those wanting to be reassured, particularly now at a time when it may take them a week to get to see their own GP.'

Foster says SLH has seen a great deal of customer interest in the service and has recently teamed up with Vielife, a provider of health and wellbeing programmes aimed at improving the health of employees. The idea of the programme is that it enables employers to see areas of weakness in the health of the workforce and respond to it accordingly.

'This service is highly valued by customers. It focuses on prevention and helps companies highlight areas of concern before it becomes a significant problem,' he says.

Boosting sales

With insurers keen to stress the positive feedback received for added-value services, can advisers use them as an effective selling aid?

Michael Payne, independent health insurance intermediary at Health Plan, says using these services as a sales tool may help advisers secure a deal with corporate clients, but individual customers may not be as easily swayed.

'I do not think the availability of such services prompts someone to purchase the insurance in the first place. It may help to sway a company's decision, but an individual's decision is usually based on cover and the availability of these services wouldn't make much difference to the sale itself,' he says.

Jones agrees, but stresses the importance of highlighting these services as a way of retaining clients.

'Complimentary extras are more of a secondary consideration when compared with price and benefits,' he says, 'but facilities such as health websites and phone lines are an effective retention tool. The more people use them, the more they develop a relationship with us through a non-claims episode ' and that is good for the interests of the business.'

According to Briggs, if complimentary services help insurers retain clients, advisers are likely to experience greater client retention too.

Julia Maxwell, managing director at Premier Health, says she feels using complimentary services as a selling aid can help advisers secure a sale, but stresses concern about the direction these services are taking.

'Add-on services are informative and while the core benefits and price are the main factors dictating a sale, they do have value. Facilities such as these are almost expected nowadays. But in terms of new developments, I am not sure where else insurers can go ' some are beginning to offer legal and tax advice lines and I think that may be taking things a bit far. These facilities ought to be and should remain medically related,' she says.

However, Briggs disagrees, saying focusing solely on health issues can limit the advice given to consumers.

'If you focus exclusively on what is construed as 'health,' you may fail to address certain issues. Stress, for example, can be caused by a number of issues such as child care and money worries. These issues are loosely related to health, so I think it is a mistake to limit these services to health factors alone,' he says.

With insurers beginning to see an increase in both client retention and the number of policyholders using complimentary services, it is likely the market will continue to see further developments in this area. As providers become more innovative in the services they offer, others are likely to follow suit in order to remain competitive and take-up is likely to increase. Perhaps when take-up of these services does increase, advisers will view them as more beneficial and use them more readily as a PMI sales tool.