Finding the value in the small corportate medical insurance market

Best value

Employers in the small corporate market only seem to have one thing on their minds when it comes to buying private medical insurance (PMI) in the current economic climate, and that is price.

They are also shopping around with much greater frequency. Previously the majority used to stay with an insurer for at least two years before re-broking but now a high proportion are ‘testing the water’ annually.

Indeed, some SMEs have become so determined to try to save every last penny that they are engaging two or even three different intermediaries to broke the market for them at the same time. But this approach can sometimes backfire because, with so many products now operating on a modular basis, brokers can be tempted to cut out elements of cover to appear to have come up with a keener price than their competitors. Finance and HR directors can therefore unknowingly find themselves comparing ‘apples with pears’.

The preoccupation with price has not been helped by the fact that there has become increasingly little to choose between the cover and service propositions offered by the major insurers in the SME market. Their determination to hang onto what business they already have has tended to mean product innovation taking a back seat, and service standards have in some cases also deteriorated. 

 But focusing entirely on price is more than likely to turn out to be a false economy because you invariably get what you pay for. Having to continually switch away from insurers because of shoddy service experiences or disillusionment with cover quality only creates more work at the end of the day and ties up decision-makers who could otherwise be making a more substantial contribution to the bottom line.

The key is to identify an insurer which represents a cultural fit with your organisation and which you feel that you will be able to work in partnership with for the medium to long-term in order to keep premium increases under control. Achieving this may involve the HR director having to do a little detective work of their own because, although intermediaries claim to conduct reviews of the whole market, they often look no further than a handful of major players and can be more concerned with realising short-term savings than with singling out a company that is really going to add value for the client.

The best value propositions are not always to be found with the well-known brand names with the keenest headline pricing. These often quote unrealistically low premiums to potential new clients to try to maintain their market share figures but then dramatically hike rates at renewal. Smaller and less well known players are capable of providing greater pricing stability and more reliable and personable service.   Just ask about retention levels and if they are not in excess of 90% think about the time you will be spending sorting out the insurers service issues before considering price alone.

A not-for-profit organisation like WPA, for example, will not be the first name on most employers or intermediaries’ lips because it doesn’t spend money on advertising and is only prepared to deal with a hand-picked bunch of around 20 brokers that it feels have the appropriate culture and levels of expertise.

Nevertheless, to those in the know, WPA has become synonymous with transparency, technological excellence and outstanding service standards – including easy transfer terms. It is also most unusual in proactively suggesting ways of reducing premiums and in offering some highly innovative formats that supplement the services provided by the NHS. These include its NHS

Top-Up plan where premiums start at 92p per week.  An extra on this policy pays for advanced cancer drugs not available on the NHS, an alternative to comprehensive cancer cover especially when the majority of private cancer care takes place in an NHS setting.  WPA’s “shared responsibility” approach is an innovative and growing phenomena where employees are required to share the cost of their claims up to an agreed annual maximum.  It can halve premiums and make beneficiaries become partners in the scheme.  Ideas like this make something that has been seen as a perk in the past become a genuinely valued benefit today and sustainable in the for the future.
     
Edmund Tirbutt is a multi-award winning freelance journalist who specialises in health insurance and protection issues relevant to the workplace. He contributes regularly to specialist publications like Health Insurance, Corporate Adviser and Employee Benefits.

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