Zurich has admitted that the launch of its private healthcare diagnosis product is unlikely to lead to a full private medical insurance (PMI) product to compete in the market.
However, the insurer said after it had settled into the market it would consider widening availability to smaller schemes or dependents, and it did not rule out the possibility of working with either the individual or group risk parts of its business.
The LiveWell Diagnostics product was unveiled today and offers employees private access to specialist consultations and clinical diagnostic tests before referring them for NHS treatment.
It is available for schemes of at least 250 employees and has been put together by the accident and health arm of the business.
Zurich head of accident and health Stephane Baj (pictured) told Health & Protection that he hoped the entry-level product would “find a nice room in the market”, but a full PMI product was unlikely to follow.
“I don’t know about the wider Zurich business, but for this product we’ve built, I don’t feel there are any plans to make it a full-fledged medical product for two reasons,” he said.
“First this space is already crowded with specialists and we respect what they do. It’s a market that has its strong challenges and I’m not sure that we want to or are ready to overcome these challenges.”
Second, Baj said underwriting the diagnosis risk and then bringing together the management of providers and relationships was a very similar approach to how the accident and health team operated other products such as its business travel insurances.
But he continued: “Becoming a provider and managing the network ourselves, which is basically what the health insurers are doing, is a very different activity and it’s not one we feel ready to do.”
Containing medical inflation is key
The diagnostics product has been developed and piloted with the large employee benefit consultancies including Aon, Willis Towers Watson, Mercer Marsh Benefits and Lockton over the last three months.
And Baj emphasised that it was initially targeted at schemes of at least 250 insured members to ensure it was financially sustainable.
While this may mean a natural leaning towards large broker and adviser firms, Baj said he was “happy to make friends” with any advisers around the country that had clients meeting the requirements, noting that it would be easier for both parties if they were already working together through other products.
“In the beginning we want to be able to provide the sustainability of the product and its pricing and for that we need to reach a critical mass and we have this 250 member mark in mind,” he said.
“Containing medical inflation and making sure the pricing we are imposing is sustainable is key, we believe it goes together with the principal of the critical mass and why we want to reach that quite quickly.”
And he added that the insurer was happy to consider reasonable multi-year pricing agreements.
Product evolution
Baj expects an 18-month settling in period to establish the product and ensure it is sustainable and operating effectively, before considering if and how to expand its reach.
“Perhaps one of the first new steps would be to extend it to family members of those employees,” he continued.
“This would trigger some product governance requirements in terms of dealing with people who are not employees, which basically would get us compliant with consumer regulations, so that could be one option.
“The other option could be looking at companies and schemes of smaller size. These are two options that are still under consideration.”
Individual launch not a priority
It seems that a launch into the full individual retail space is unlikely with Baj and his team believing there is more room to grow in the corporate commercial space.
But some form of product sharing or support with the individual life and group risk businesses could take place, although he noted after meeting leaders in these areas there was interest but they were not prioritising any move.
“We are conscious and mindful that the world of benefits is already used to Zurich in disability and rehabilitation and we are very well aware our life colleagues are used to dealing with large groups and retail customers,” he added.
“So we will be open to conversations in how to either use that product to open up their product range or use our underwriting capabilities to support their potential plans to extend the type of products and benefits that they want to distribute with.
“Any strategic move would be decided by the specialist in that area though, not us. We’re not excluding launching a personal lines version, but there are no plans for that at the moment.”