Market views Tina Jennings, Towry Law The industry must question the reasons behind the p...
Market views
Tina Jennings, Towry Law
The industry must question the reasons behind the purchasers' preference to shop direct and bypass the services of a broker.
We can easily identify some of the main areas of conflict for the purchaser, including perhaps inertia, the fear of costs associated with the use of a specialist intermediary and sometimes even the disclosure of specific lifestyle information.
There is much the broker can do to fill this void. However, as long as the broker continues to perceive this to be a non-profitable area, the success of the direct market will continue.
Intermediaries would be well placed to take a holistic approach to lifestyle services. Further development within this area, in partnership with providers, would produce the opportunity for intermediaries to enhance the added value of their overall proposition.
A bespoke online system specific to each intermediary would go some way to reducing labour intensive administrative costs and overheads. This, coupled with a dedicated team of contacts for the day-to-day support of all transactions, would further reduce the burden and ultimately fulfil the intermediaries' financial objectives.
Presently, some providers offer an extensive range of products via the direct channel but limit the range available when selling through the intermediary. Providers could do more to recognise the opportunities in utilising the intermediary resource by working in partnership to increase the overall PMI market penetration.
Peter Bye, Private Health Partnership
That 85% of individual sales are done directly with insurers is no surprise. Insurers utilise their distribution channels to the maximum and are obviously able to pursue marketing and advertising campaigns involving sums of money that intermediaries could only dream of.
The general public prefer to buy from a name they are familiar with. They assume they will purchase a 'quality' product, however, they may define it at a competitive price.
Insurers like to control their own market and many regard intermediaries as loose cannons. However, intermediaries take cover, cost and service into account. These are difficult factors for insurers to consistently address.
Intermediaries are only one of a number of distribution channels. They cannot expect to be supported by insurers when many have sales forces in direct competition. However, all distribution channels could be enriched if insurers co-operated with each other in an attempt to grow the market.
Many years ago there was a regular advertisement to 'get the strength of the insurance companies around you'. This was a consistent message from which everyone benefited. A similar campaign in the PMI market would assist enormously.
PMI has a good story to tell. It makes sick people well and often saves them from an early death. Insurers could help us all by telling that story.
Claire Ginnelly, Standard Life Healthcare
The most important point to make about distribution channels is that people want the option of where and how they buy financial products and healthcare solutions.
The overall industry figure probably masks the fact that some providers rely on one method of distribution. Focusing on whether one channel is preferable to another just shifts the business around and does not grow the market. The key is to not just do more of the same to support intermediary sales, but to do it better.
Just as some PMI insurers may have relied on one distribution approach, some intermediaries have focused on specialist aspects of financial or healthcare planning, not always embracing PMI. But as the growth in self-pay and related insurances demonstrates, people are making more financial planning decisions about their healthcare.
It is here that we can do even more to support intermediaries, to bring healthcare planning to the heart of a more holistic financial planning process. A product design that lets people save for healthcare and provides insurance to avoid open-ended risk is a great tool for intermediaries. This is especially so for IFAs where it offers the opportunity to provide at least three products.
It is a mix of the right products and the right support across all channels that will help us grow the market and there are many more ways in which we can and will continue to support intermediary sales.
Paul Swanson, Healthwise
Like any business, insurers have to protect their business portfolio, and as specialist healthcare intermediaries, we cannot expect insurers to help us.
Direct selling is popular due to the public being unaware where to obtain advice about health insurance; instead they contact household names such as BUPA, AXA PPP healthcare & Norwich Union directly for a quote.
In percentage terms, health insurers make far better profit margins on personal business than corporate, primarily as the group market is very price sensitive and clients can often move insurer without incurring a penalty.
In our experience, the vast majority of personal business is derived from employees leaving a company-funded arrangement, often when they have had an ongoing illness. Traditionally, insurers have mopped up group leavers themselves by writing directly to those individuals.
However, certain insurers are prepared to work proactively with the intermediary to manage group leavers by allowing them to make the employee aware of the options that are available.
Indeed with the FSA set to regulate the industry we feel sure that many non-healthcare specialists will decide to move away from healthcare insurance completely, either passing the business back to the insurer or perhaps looking to network with organisations such as ourselves.
