NHS in crisis: a pivotal moment for PMI?

Growing waiting lists and access issues in the NHS are prompting a new wave of interest in private healthcare among consumers, but can the boom in self-pay be replicated in the stubbornly stagnant PMI market? Eleanore Robinson investigates

Long NHS waiting lists have led to both a rise in demand for self-pay healthcare and private medical insurance (PMI) in order to access services more quickly.

The latest LaingBuisson Health Cover report found strong demand pre-Covid for corporate PMI services, which account for 79% of subscribers/enrolees.

With the pandemic hitting already-stretched NHS resources hard, that has continued through into 2021, according to the report.

It continued: ‘When people in employment continued to rise, so too, according to industry sources, did private medical cover subscriber/enrolee numbers.’

With no end in sight to the difficulties in the NHS, is now the time for the PMI market to enjoy a significant growth spurt?

Executive chairman of the Association of Medical Insurers and Intermediaries (AMII) David Middleton said that from talking to its members, there has never been as much demand as there is currently from both individuals and corporates due to the issues with the NHS.

He said: ‘People do want to enquire about medical insurance which is great.’

AXA Health commercial director Fergus Craig added: ‘We are seeing significant uplifts in Google searches (22%). We are seeing a lot of activity in the individual market. It is pretty competitive. At the moment the SME market is doing very strongly – genuinely, possibly the strongest I’ve ever seen it.’

Craig said this is being driven by people not being able to work until they’ve had surgery and a lot of companies getting squeezed to put through higher salary increases.

Benefits in kind such as PMI are ‘part of that equation’, he explained. Employers are asking ‘Is the benefit I’m providing perceived to be of more value to my staff member than it costs me?’, Craig added.

Barriers remain

While demand remains strong, barriers to growth remain.

In the corporate market, the taxation system is deterring some people from taking out policies.

Middleton explained: ‘It is P11D – the benefit in kind. I wouldn’t see why you wouldn’t have 100% membership of a corporate scheme if nobody was taxed. People don’t join sometimes because of the quite onerous tax implications for them. So that is a barrier in the corporate world.’

However, he explained, that since it is an employee-led market, employers are reluctant to take PMI away altogether.

The remainder of the market (21%) is made up of individual lines.

According to LaingBuisson, the ‘cost of living crisis’, with CPI predicted to reach 10% by the end of the year, may ‘dampen’ demand in the sector.

Another barrier to growth in the individual market is people wanting to switch policies to a product that covers their pre-existing conditions. Middleton said: ‘That is a barrier at times as you can very rarely insure something that you know is going to happen.’

Affordability is also a factor in the corporate sector explained Aviva UK Health medical director Dr Doug Wright, as the PMI market has only ever been around 11% of the UK population.

He said that, despite the problems in the NHS, inflation and the pressures on everyone’s pockets, including corporate pockets, is holding back growth.

‘I think there is an even sharper focus on affordability for PMI,’ said Wright. ‘It feels like the two things are almost trading each other off at the moment. On the one hand you have people thinking it is a product we want, and we want to make it available to ourselves or our colleagues or employees, but also we will need to keep it affordable.’

Adding value

One of the ways of tackling barriers to growth is bringing out value-added products to support clients.

It is one of the reasons Legal & General introduced its ‘Umbrella Benefits’ package, said its director of intermediary Julie Godley.

She said: ‘Private diagnostics is an example of the type of Umbrella Benefits we offer clients. It’s something they can tap into on an ongoing basis and as such, helps enhance customer engagement while also providing intermediaries with more discussion points with customers.

‘By moving towards bespoke approaches and away from the ‘one size fits all approach’ it gives clients greater flexibility and control over their healthcare.’

For AXA Health, it is existing products that are proving popular but also some aspects of new features that have come on board.

Craig said take up of AXA’s modular products, where the management get ‘the full fat’ PMI while other staff receive more limited benefits, has soared.

He explained: ‘For instance, our GP service is the most popular thing since sliced bread. We are clearing 10,000 consultations a week. It is just a massive sea-change in the level of engagement and used by customers on a regular basis compared with what existed in the PMI market before.

‘Mental health is a really top-button issue for employers and we are seeing that in the numbers. That is really making them see the value of what they are getting, I think. Mental health treatment isn’t the most expensive thing in the world but they see more customer contact and more customer benefit, and not a vast increase in cost as a result.’

Gathering data

Godley added that customer feedback had revealed value-added benefits that are free to consumers, such as wellbeing services, were very popular.

She said: ‘The idea is that all customers get extra value on an ongoing basis. And the benefits can help immediate family too. For example, if your child was being bullied at school, our Wellbeing Support services could be used to help support them with counselling.

‘Obtaining data for such benefits is an industry-wide challenge but the above highlights how our wellbeing add-ons can add huge value, and feedback from customers confirms this.’

Wright agreed, saying it was not easy to prove a direct, tangible financial benefit from health and wellbeing services on PMI products.

He said: ‘The reason I say that is in the corporate world a lot of what we see in terms of claims is muscular-skeletal conditions and those aren’t the sorts of things you improve by a general wellbeing approach.

‘However, diabetes and heart conditions do have benefits from wellbeing – but only over a long period of time and mainly in Aviva’s consumer book as the customer is a bit older.’

Wright said that data is going to be useful on the mental health and muscular-skeletal pathways, generating and using clinical scores pre and post-intervention which show the degree of improvement. ‘That sort of data is going to be really powerful as it builds and becomes richer over time’, he said.

Middleton agreed saying: ‘Data is vital in everything we do. Without data how do you influence behaviour, how do you have a strategy? Particularly in the corporate sector, how do you demonstrate value? What is the medical plan for your employees? Does it demonstrate that you got somebody back to work for example? That kind of information is so important for me just for corporates to put a return on their investment.’

Wright believes the number of people who have PMI will grow.

‘I think there is a very long-term issue we have in the UK about the affordability of many of our publicly-funded services,’ he said.

‘If you look at dental services – 15 years ago that was very much a similar situation and now it is much more of a mix of public and private provision. I think we will see a much more obvious mix of healthcare provision than these two things called the NHS and private care that never touch on each other.’