Equipsme founder and managing director Matthew Reed has visited Downing Street three times meeting prime ministerial advisers to campaign for the removal of P11D tax on employee health benefits.
In an exclusive wide-ranging interview with Health & Protection, Reed also revealed the insurer would consider expanding its offering by building on expertise from potential investors.
And while he is regularly receiving approaches from protection insurers to partner with, at present none are able to match the simplicity of offering which is key to Equipsme’s operating model.
Tackling tax breaks
The subject of taxing workplace health benefits has become even higher profile with rising NHS waiting lists, but a concerted push by the industry was not recognised in chancellor Jeremy Hunt’s Budget this spring.
Earlier this year, Health & Protection’s inaugural Health Summit heard the sector should change tack in its campaign for cuts to private medical insurance tax and focus on P11D benefits charges.
It is a sentiment that resonates with Reed who met with Boris Johnson’s SME business adviser and subsequently Sajid Javid and Liz Truss to campaign to end P11D tax on inexpensive products, with the aim of increasing cover across UK workforces.
Reed was clear that any cuts should only be for provision for lower paid staff who are in the 0% and 20% tax brackets.
“One of the questions posed by Make UK was what would help you buy this for your staff? And it was always, give me a tax break,” Reed says.
“We did a quite a bit of lobbying, but to get something like this to work, you have to show that they’ll make money by cutting taxes elsewhere. You can’t just say get rid of this because nobody will do that.
“When we looked at it, we said if you got rid of P11D on cheap affordable benefits, you’re going to get it back in insurance premium tax because more people are going to buy insurance.”
Removing P11D taxation would support the trend of more employers embracing whole of workforce solutions offering health benefits to every employee at an organisation, rather than being limited to top executives or high earners.
Strategic review and investment to expand
Now five years after its launch, the Axa Health-backed managing general agent (MGA) is also considering the next stage of its development with the opportunity for an investment partner for its next big strategic move.
Reed agreed it was understandable to suggest expanding into individual or international markets for its product offering, but there were no set plans yet.
“Our next strategic moment will absolutely be linked to the next investment partner and the expertise they will bring,” Reed said.
“Where I’ve seen businesses getting it wrong, is when they start doing things where they don’t really know what they’re doing.
“It’s very easy to put on a slide individual and international, it’s an easy thing to say, but how are you going to do that?
“We’ve got a lot of conversations and some of them say to us ‘individuals’ and some say to us ‘international’ and we say ‘that’s great – but we need you to help us do that.“
Protection cover and marketplace options
As part of this review and refresh of its product, Equipsme is undertaking consumer research to understand what key elements it should be including in its plans.
This includes the potential for creating the insurer’s own marketplace with additional options which employees could buy through their policy to either upgrade cover or as different products.
Having built its system with two payment engines at launch, this means a straight forward process when scheme members already wish to do things like adding family members onto their plan – something which it aims to replicate for other services.
Chief among this marketplace area of exploration is protection cover, but whether this occurs will rest with the customer.
“We probably get an approach once a month from somebody that wants to add their product to us – add life insurance, add critical illness, add income protection,“ Reed said.
“And we have a standard push back that’s the customer hasn’t asked for it.
“If you can show me customers are out there saying they really want to buy health with x, then we’ll have a conversation, because you have to be so careful where suddenly you’re selling everything and not just one thing.“
Another issue in this regard is that underwriting for protection products can be technical and does not meet the straight through approach the firm is looking for.
“With our product you can go on cover with no medical questions,” Reed continued.
“We get people quoting and buying in three minutes, so when someone says, they would like to add life insurance, we think ‘yes, life is an interesting option’.
“‘We’ve got this product with six questions’, they say. But for us six questions is too many – we can’t send our customers down a user experience over here because we know the drop-out rate.
“We have absolutely considered all of these things, but we are yet to find anybody that has done something really interesting in their space that would sit alongside our customer journey.“
‘Brokers are where the customer is’
While Equipsme has focused on making its direct online purchasing journey as smooth as possible for UK businesses, advisers are also a key part of the process, with Reed noting they have the “best customer connectivity”.
“You have to go to where the customer is, and without a shadow of a doubt, brokers have the best customer connectivity, that is what they’re there for,” he continued.
“It’s got to be a trusted adviser. It’s got to be someone that they know and someone they’ve worked with – not us.
“We are the bit that comes in and provides the service, which is quite important. When you look at our broker base, we’ve got everybody from Aon, Mercer Marsh, WTW, IHC and Buck all the way to boutique specialists.”
This variety of client sources is reflected in the range of firms being attracted, as Reed noted it had recently issued a quote for a business with 6,500 employees and is in conversation with a 20,000-employee organisation.
However, it also covers many firms with just a handful of staff.
Product priorities
When it comes to the product itself and cover being offered the research conducted before launch made clear what was and was not a priority for customers.
Inpatient and GP services were a priority whereas employers were split on mental health support, but demand for this service has soared since.
Flexibility and clear communication is vital throughout the firm’s approach – instead of calling it a musculoskeletal pathway it has simplified it to aches and pains.
“When we built the product, it was very important that it worked as smoothly as possible,” Reed continued.
“One of the things that was quite ground breaking at the time was to get Axa to accept our remote GP referrals.
“You can use your own doctor or you our GP doctor, both of them will get someone started with the Axa process because there’s absolutely no point paying for a remote GP who says you now need to get a referral letter from your NHS GP. You could be waiting another 10 to 15 days.”
Guided treatment pathways and open referral processes are a significant trend within the private medical insurance world of late, proving popular with insurers and customers, but drawing some frustration from advisers as delays mount with access to the most popular physicians tightening.
Equipsme uses these arrangements and Reed noted demand is increasing as more health insurance plans are being bought – but he emphasised that clear communication about services within the plan was vital to ensure members understood any limitations to the direction of their cover.
Must be ‘admin light’
But the overall aim from launching the product five years ago was to find a niche between full PMI and cash plans, bringing more organisations into the market which previously had not had any insurance.
And that includes the need to remove as many barriers to entry whether they be created by providers, regulators or government.
“I think if you’re trying to bring new businesses into the market, it’s got to be admin light,” Reed said.
“They don’t want anything else [to manage]. I sat in one owner’s office who’s got three staff and doesn’t have a chance to run the business because he’s just doing all the paperwork.
“That’s what we designed Equipsme around – you can access it on your phone so why would you want to do a P11D on something simple like an affordable health product? So just get rid of it,” he concluded.