Carolyn Derrington asks what action PMI providers are taking to help employers manage their total healthcare needs.
We need only look at the recent statistics announced by healthcare analysts, Laing and Buisson, to see where the PMI industry should be focusing its attention. In 2000, Laing and Buisson figures show the individual market continuing to contract (down 3.2%) while the corporate sector increased by 7.4%. These figures should be treated with caution as we have seen a developing trend for the self-employed to secure cover under a small group contract, taking their premiums out of the individual and into the corporate sector. But can this change on its own account for the numbers? In the current and anticipated economic climate we might expect the PMI market to expand further with the corporate sector growing at a rate of up to 10% for the next few years.
So, are we ready? It is worth considering how the industry deals with the corporate sector by way of product and pricing. What do PMI providers offer employers looking to provide healthcare insurance and how does this vary by size of the company insured?
Tailoring for size
For smaller companies the market offers a variation on the individual PMI proposition; often with a more flexible rating structure and reduced premium. This premium is based on similar rating factors to the individual market, including age, and is unlikely to vary with the group's claims experience. Product benefits are also similar.
On increasing the group size, options for tailoring start to become available. The employer can opt to vary the cover provided by category of staff and, for groups of 20 employees or more, buy cover on a medical histories disregarded basis. The claims experience of the group will have an effect on the annual premium (which is still age rated) although the size of the group at which this change occurs varies by insurer. Product benefits remain fairly standardised although the flexibility to buy additional benefit options, or indeed reduce elements of cover, is available.
At a group size of 50 employees or more, however, all insurers will offer a claims experience related option on a flat-rated (not age-rated) basis. Most importantly at this point, the benefit options available to the company become virtually unlimited. All insurers offer flexible cover, tailored to the employer's needs.
Making progress
So, how far has the industry progressed towards delivering healthcare options to meet these varying needs, or are we still simply providers of PMI? We have certainly talked a lot about medical helplines, occupational health schemes and integrated care and sickness absence management to name but a few additional services. Helplines, in particular, have become an integral part of the overall PMI proposition. Beyond the straightforward policy advice lines, insurers provide 24-hour telephone access to medical information, GP advice and counselling services, most notably for stress-related problems. These services enable the employer to provide healthcare support and information within a philosophy of wellbeing for their staff.
Employee assistance programmes can provide a range of benefits, including stress counselling, on a face-to-face basis. These services are also perceived to protect the company from litigation if employees claim the cause of their illness is stress in the workplace. Occupational health schemes are often part of the company's own internal HR support team, but can be arranged by a number of health insurers either through their own services or out-sourced to a specialist provider.
Even when considering these support services and combining with other services such as sickness absence management and the integration of health insurance products such as PMI and income protection, the theme still remains the same. We are offering private 'illness' insurance with support services to manage the medical problem when it has arisen, and not 'health' insurance to prevent the problem from occurring in the first instance.
Is this the future or do the needs of the employer require us, as healthcare insurers, to deliver a fundamental change in strategy? We might begin to learn more about health insurance by considering the ongoing success of cash plans in the company sector. These products can more accurately be described as healthcare as they provide an element of health maintenance cover towards routine treatments.
The large corporate market will be driven or even led by such issues. Meanwhile, the individual market will continue to be consumer and marketing led, with the focus on providing innovative products at affordable premiums.
But what about smaller companies with less than 50 employees? Have we really considered their needs or is this profitable and expanding sector to be left in the middle ground, receiving tweaks and quick-fix solutions tailored to the ease of service provision, rather than driven by specific employer needs.
This must be the sector which holds the greatest potential for growth over the next few years.
