This time last year the corporate PMI sector was marked by a hesitant confidence, with anecdotal evi...
This time last year the corporate PMI sector was marked by a hesitant confidence, with anecdotal evidence suggesting that the market was at last beginning to show signs of growth.
This confidence was confirmed at the end of the year by the Laing & Buisson PMI sector report. While the individual market actually fell by 0.6% in 1998, the corporate market showed signs of recovery. By year end the number of company-paid PMI subscribers had risen by over 6%, bringing the total subscriber base to 2.19 million.
Growth appears to be coming from the smaller end of the corporate market, with many start-up companies, particularly in IT and media, requiring attractive benefit packages to attract and retain highly skilled staff. A spate of new product launches targeting smaller businesses, starting with WPA at the end of last year and quickly followed by Exeter Healthcare, highlighted the pick-up. More recently, third party administrator Medisure has entered the market with a product for individuals, small businesses and affinity groups.
Enterprise, WPA's latest corporate offering, is available to all businesses with three or more employees, and rather than providing conventional blanket cover it allows the employer to tailor the cover to meet each individual member's needs. The core element of the scheme is standard cover, which provides inpatient cover, and some outpatient cover that can be upgraded through a range of additional benefits. These include international, comprehensive outpatient, physiotherapy and dental cover. A cash plan is also offered.
Exeter Healthcare entered the market with Professional Care, a plan targeting professional firms and partnerships such as accountants and solicitors. Clients can opt for Choice, which provides cover for major and essential hospital costs, related specialist fees and outpatient consultations, or more comprehensive cover is offered through Elite, which also covers physiotherapy, osteopathy, ambulance and home nursing costs.
The most recent launch comes from Medisure with Health Protector, which is challenging its competitors in terms of service levels. The company has ensured that it will settle all claims within five days in 90% of cases, compared with an industry average of three to four weeks. Only sold through selected intermediaries, the product offers three levels of cover - Gold (comprehensive), Silver (standard) and Bronze (budget).
The larger end of the market, however, is now virtually saturated, with business being churned on a regular basis. As the fight for market share hots up, cost-efficiencies and service levels have become paramount, so margins are slim.
Successive hikes in insurance premium tax in 1997, 1998 and 1999, combined with increases in National Insurance, has not helped contain costs. It is for these reasons a number of larger organisations have turned to self-insuring through a trust operated by a third party administrator. Without any insurance company overheads or IPT to pay, costs can be substantially reduced.
On the value side, clients can tailor plans to only include the benefits they require to the levels they need and the scheme can be badged in the client's name. Trusts are therefore becoming an increasingly attractive alternative for companies with over 400 members of staff.
According to Laing & Buisson, this market now accounts for almost 8% of the company-paid and non-insured subscriber base. By the end of 1998, there were an estimated 209,000 individuals enrolled on company-paid, non-insured schemes, a rise of over 11,000 on the previous year.
Rachel Williams is senior staff writer
