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Paul Gambon, sales and marketing director of Medicash, spoke with Health & Protection about a rapidly growing cash plan market and strong retention rates as employers recognise the value for employees.
He also explains how benefit design and use is changing and why intermediaries provide a key element in the market.
Demand for health cash plans has been growing significantly across much of the market. What are the key reasons for this strong growth?
Offering high value, easily used benefits has become a way for employers to show staff they care, enjoy the benefits of a healthier workforce, and guarantee a good return on investment. Medicash’s policy numbers have grown by 128% since January 2020 – and grew 22% last year alone, which is a substantial acceleration considering our 153-year history.
In terms of pattern of demand, we’ve not really seen a specific one. The appeal of cash plans is designed to be wide, covering a whole workforce instead of just one demographic of employees, and it’s not industry specific as they can be a great boost for otherwise lower-paid positions. There seems to be a slight lean towards businesses with younger workforces, which typically can be lower paid but place more value on the benefits provided, but much larger companies are also showing interest in company-funded options.
How has increasing claims and inflation affected premium rates?
We’re proud to have one of the lowest operating costs in our industry, meaning we’re able to offer more benefits in return and shelter premium increases wherever we can. We’re not immune to inflation and the rising cost of individual claims, but we’re also seeing a rise in claims overall – so we’re seeing both volume and cost increases as part of the cost-of-living crisis.
There are of course cases where we need to increase premiums because the scheme has been well-used. In these situations, it’s a case of communicating to companies that they’re getting a great level of engagement, and people are seeing the value of their benefits. This usage will also be reflective of a healthier workforce which brings about its own cost savings in terms of absenteeism rates, recruitment and retention. We’ve had feedback from clients that demonstrating tangible return on investment is a huge part of securing additional funding for premium increases when they happen, so it’s a case of balancing the scales.
What benefits are being most well used and appreciated?
Dental, optical and physiotherapy have been and remain the most frequently made claims at Medicash, as they’re the most common day-to-day healthcare treatments. However, the pandemic really brought forward the case for virtual services as part of improving access to healthcare, and many more people are now more comfortable in using these digital tools. We’ve seen a 56% increase in virtual GP use in just six months as NHS GP services have become more strained, and this does not seem to be changing any time soon.
We have done a lot of campaigns to increase awareness around SkinVision. As a result, we’ve now diagnosed more than 870 skin cancers from over 200,000 skin checks completed by our policyholders – and are seeing increasing use as time goes on.
Although it’s a much smaller part of our business compared to a few years ago, we’re getting more enquiries now regarding the cover for private medical insurance (PMI) excess available within our cash plans. Nowadays employers and advisers are seeing the link between covering a PMI excess with their cash plan and taking a slightly higher excess with their PMI provider. This way, the company receives a reduced PMI premium and, as the employee still puts something in, there is still an element of control over usage and claims. This also prevents employees from being hit with significant additional costs to use their PMI policy.
How important are advisers to you and the cash plan market?
The intermediary world is the largest source of inbound new business to us. They’ve become increasingly important for us over the last 10-15 years, to the point where they’re an extension of our business.
Awareness of cash plans is significantly better now than in the past. Advisers understand the value of health cash plans and how they can work both in conjunction with PMI or as a standalone employee benefit for the wider workforce. It means too that questions have now evolved from “What is a health cash plan?” to “What does yours do that’s different?”
Advisers are key to communicating benefits to the customer, and how they can potentially help their strategy. It could be about talent retention and attraction, absence, or about amalgamating their different health benefits into one place.
Intermediaries now also really promote cash plans as a whole-of-workforce opportunity, as traditionally many companies don’t offer private medical insurance to their entire workforce due to the cost. This increases the income stream while adding significant value to their proposition and client solution tools.
How have you managed the increase in membership and claims activity within Medicash?
Five years ago, we had around 270,000 policies – we’re now at 625,000, so it’s been a case of keeping our operating costs down and our efficiencies up, while remaining competitive with the benefits we offer.
A big part of this has been focusing on technology and making sure that we consider how we can find the most efficient way of working that also provides the best and simplest customer journey.
For instance, we launched the claims app in 2014 and have to date paid around 3.5 million claims through it – it would have been significantly longer and more expensive to process these manually. App usage has progressed dramatically over time, with more than 90% of our claims coming in via the app or online over the last 12 months.
This shows how our investment in technology can improve our efficiency, and in turn our customer satisfaction. Plus, all our clients and customers who choose electronic communication, rather than paper, can significantly reduce the carbon footprint of their health plan.