PMI can be bought directly from the provider. Some firms have procurement departments which work closely with HR and then buy in the insurance. However, according to Paul Ashcroft of consultancy Mercer, at least 80% of large corporate firms use intermediaries (often known as brokers) for their specialist knowledge.
Groupama Healthcare, the healthcare arm of Groupama Insurances, which operates in the PMI market, only sells its products through brokers. According to healthcare director Alistair Sclare, there is so much to consider when buying PMI, the best thing is to seek professional advice through an intermediary.
“There are many specialist PMI brokers who are perfectly placed to give you all the information you need and remove most of the administrative burden involved in taking out any new insurance,” he explains.
“You will get good advice and also access to the most competitive premiums. A broker will be able to advise not only on what cover is available, how it may help your business and staff, but they will also share their knowledge of the market. Who does what, who provides the best service, who will really look after you and your employees. They will also remove some of the common misconceptions about who does what such as who owns the hospitals and what hospitals you can go to. PMI had been dominated by one brand for many years and this tends to lead to incorrect assumptions about others’ ability to provide equal or better products. A broker will remove this possibility very quickly. Above all with a broker you will get a full review of products and prices available. This is just not possible making these enquiries yourself.”
Many intermediaries in this area are members of AMII, the Association of Medical Insurance Intermediaries.
“A number of our clients [employers] have procurement processes,” Paul Ashcroft explains. “We tend to work alongside procurement. The procurement teams will have certain goals about what they want to achieve and how the purchasing process works but they don’t have the in-depth knowledge of the insurance market and the things we bring to the table. We tend to work with them, so if they have a particular way of procuring – for instance an online auction – we will work with them and provide advice about the responses they are getting and work with them to get the best deal.”
According to Ashcroft, employers often use consultancies such as Mercer because they want to build a picture of the trends that are happening with PMI claims and what the costs are likely to be in the future so they can benchmark them against what the insurer is telling them the premium will be. “We can provide that independent viewpoint and we can use that to negotiate with the providers. We bring some technical expertise that employers don’t have.”
Tristram Hawthorn, head of risk & healthcare at rewards consultancy Vebnet, urges firms to “either liaise with the main providers directly or speak to an advisor.” He says, “PMI is a complicated benefit and does not lend itself well to normal procurement processes due to varying cover available… These variables include but are not limited to policy structure, funding methodology, level of employee funding (whether you pay for the employee only or their dependants as well), excess level and coinsurance, integration of the policy with NHS waiting lists, hospitals you wish to have available and whether you include incentives to use the NHS.”
Steve Herbert, head of benefits strategy at Jelf Employee Benefits, agrees: “It’s definitely worth using a specialist PMI intermediary, as comparing the benefits between providers can be devilishly difficult, and a good adviser will first assess the employers requirements, and then narrow the range of suitable products, plus of course advising on the structure of the plan and negotiate deals with the insurers.”