Private medical insurance (PMI) pricing is “really strange” at present with insurers chasing good risks but also wary of an impending claims deluge, according to advice firm Howden Employee Benefits.
The intermediary also called on providers to offer more transparency about what their products offer as businesses are increasingly unaware of and not utilising plan benefits.
And the firm revealed it is exploring a sleep monitoring service as a wellbeing benefit for clients and has added a global benefits desk to expand international coverage.
Predicting loss ratios
In a wide-ranging interview with Health & Protection, Howden Employee Benefits executive director Robbie Weston highlighted one of the most turbulent issues at present is PMI costs which he describes as a “really strange market” with premiums taking significant swings up and down.
Usually insurers use loss ratios to understand future premiums, but with claims levels generally far lower over the last 12 months due to the pandemic, loss ratios should be quite low.
However, Weston (pictured) notes insurers are taking the opposite approach and placing greater emphasis on what is to come, rather than what went before.
“Insurers are predicting loss ratios will be much worse in the coming year because people will now be able to claim and will need to claim for more care than they previously would have,” he says.
“But insurers are all chasing good risks, so companies with a good claims history might find they have a reduction in premium this year and you might find lots of insurers desperate to pick up those good cases.
“However, those which claim much more heavily, we’re seeing much less appetite to pick up those cases,” he adds.
This highly unusual topsy-turvy market means a good broker is more valuable than ever and Weston urges the industry to ensure insurers are transparent and manage client premium expectations.
As a result, one of his main focuses is convincing employers of the value in building wider wellbeing strategies for their business, rather than simply buying products for staff to use.
But this brings its own issues around product transparency, overlap and communication, which he calls on insurers to improve.
“I would like to see more accuracy in terms of what PMI providers offer. So if it’s a top of the range health insurance product, then what is that and what does it cost?” he says.
“Or if it’s a good health insurance product but offers a whole load of other wellbeing benefits, then I’d like companies to actually make that distinction, rather than all selling themselves as just a PMI policy which has a lot of other stuff in it.
“What we’re seeing is firms buy a policy for the insurance and the premium, and then they get a whole load of other stuff which might be a surprise or might not, but it wasn’t the reason they bought it.
“I’d like to see more transparency around what is being charged for, what is being offered and which bit of that cost is the actual medical insurance and which bit is the rest,” he adds.
Group risk and add-on overlap
In the group risk market Weston is largely satisfied with the evolution of products and providers at present but he notes the continuing theme of a lot of benefit overlap.
For example, if a firm has multiple covers such as PMI, income protection, death in service, an EAP, and critical illness plan it might have several versions of a virtual GP service.
While this seems a nice problem to have, the questions remain about which is the best, which will respond quickest when needed and which do you offer to staff?
“Do you want to display all of them to your staff and tell them if they have to wait 20 mins for one then call the other one?” he says.
“In practice, organisations were only communicating one of those GP services and didn’t know they had access to the others.
“So I’d like providers to be more transparent about what they provide – what is core to their offering and what is ancillary.”
Weston adds: “It’d just be really useful to be able to compare one provider with the other and then pick which ones you want based on the services you require as a client, rather than based on what the insurer happens to offer as they have developed their product.”
All this leads into the thorny but vital issue of communicating benefits to staff and ensuring they are aware of them and use them – preferably before it becomes a serious medical problem.
For example, Weston emphasises that what insurers are offering alongside PMI products are an excellent part of a wellbeing strategy.
But these ancillary services are just not being used because they are not clearly displayed or communicated for staff to understand them and when to use them.
“Employees often only go to the PMI provider when they need medical treatment, but there’s a whole raft of things available before needing medical treatment or even without ever needing treatment,” he explains.
“People aren’t necessarily looking for those things because they’re only looking at the health insurance product when they need health insurance, but there’s a lot of additional services to these policies which I don’t think the industry is particularly good at explaining yet.”
Sleep is the ‘canary in the mineshaft’
One of the most pressing issues during the last 18 months has been the growing realisation of the importance of mental health and how businesses are looking to support this.
Along this line, Howden is developing a sleep monitoring programme which it plans to offer clients to help employees with their mental health.
The project is still in its infancy and would need third party support and expertise to be completed, but Weston said the idea had garnered significant interest from employers.
“Sleep always feels to me like it’s the canary in the mineshaft,” he said.
“If someone’s not sleeping well its highly likely to be because they are stressed and if they are not sleeping well its likely to make that stress worse.
“The theory is that you could give a presentation, monitor somebody’s sleep for 30 days and then come back and say based on the results of their sleeping pattern, we think they should do the following.”
He added: “When I’m talking to our clients about this they are particularly interested because it feels like something completely different to what they have done before, but it absolutely zeros in on being worried about mental health and preventative care.”
Home and global benefits
And another key issue is adapting to is the wider working from home culture which is taking over as the country begins to exit the pandemic.
With many former office workers now wholly or partly home-based, this is creating challenges for employers around benefit provision and meeting staff requests.
“Lot of companies offer discounts on gyms near the office which is a really good benefit,” Weston says.
“But now staff are asking employers to make sure the gym discounts have facilities near their home. So there’s subtle shifts in expectations from employees.
Matching its expansion of services, Howden is also developing its offering internationally and as a sign of the firm’s growth and client demands it has now launched a dedicated global benefits desk.
And this ties in with the evolution of the business and how Weston sees it operating.
“Clients are progressively asking us to manage their global benefits from the UK and we’re now able to do that in a way we weren’t before and that’s very promising.
“We have to listen to clients, understand what they want, and come back with products and services to suit.
“The day-to-day job is often about renewing policies, but stepping back and saying why have you got this for your business, that’s more of a consultancy conversation than a broking conversation,” Weston concludes.