Insurance Post

Cash plan evolution - Completing the package

Despite being hyped as an alternative to PMI, Raman Sankaran explains that healthcare cash plans can be used to complete a broker offering

In recent years, healthcare cash plans have been mistakenly hyped as a simple alternative to private medical insurance. However, with the demand from the corporate market at an all time high, a HCP can complete an intermediaries' health and protection package offering.

HCPs currently enjoy a very healthy market position, appealing to both consumers looking to protect themselves from costly non-NHS treatment, and businesses searching for a highly affordable healthcare product that can be offered on a wide scale. Consumer and corporate health requirements are increasing coming together with an awareness of health, which is leading to increased demand overall.

With the rising cost of healthcare treatments and a decline in free immediate treatment on the NHS, cash plans remain an important part of a healthcare provision today and could be argued to be more relevant than ever before.

The need for everyday essential healthcare, as covered by HCPs, can only grow as consumer and corporate needs increase - a key sales opportunity for those that include HCPs in their portfolio. With only 7.5 million people in the UK covered by a healthcare cash plan, there is a really strong sales opportunity for intermediaries.

Most recently, the key business driver within the HCP market has been the corporate sector. Health-related sickness absence is one of the biggest concerns for British businesses today. It has been estimated that absence due to sickness costs around £12bn each year, with the average level of health-related absence at eight days per year, per employee, representing 3.5% of working time. This equates to a cost of £598 per employee per year.

Health impact

As a result, sickness absence has a serious impact on the bottom line and is an issue that is high on the agenda of most human resource professionals. Employers now have a legal responsibility to look after their employees, to prevent them from becoming ill through work and to take reasonable steps to help those that do become ill from their work. Many have taken steps to prove they have health and stress management policies in place and the HCP marketplace has adapted to help address these needs.

Furthermore, Health and Safety Executive guidelines have made healthcare a priority for employers. These 'duty of care' responsibilities have forced employers to look in detail at their healthcare strategies and ensure appropriate measures are in place to look after employee well-being.

Employers that do not take stress or health issues in the workplace seriously can leave themselves wide open to the risk of legal proceedings and compensation claims from employees, who may feel that they have suffered as a result of their work.

With these issues in mind, it is crucial that intermediaries understand HCPs and how it can be more appropriate than ever to recommend and sell them to meet industry demand.

Employees are very much the driving force behind organisations, and stress induced from covering sickness absence can have serious implications on meeting business targets and commitments. With the demands on employers increasing, many more are looking to cover their entire workforce with a healthcare policy. Although useful for providing access to private healthcare, PMI products are generally used to cover only senior employees for more serious medical requirements, due to their costly nature.

Due to the everyday essential nature of HCPs, there is currently no conflict with PMI products. These products work hand-in-hand to complement each other. It is important that intermediaries are able to offer comprehensive products that can be cost effectively provided to all members of a team. HCPs are low cost and it is easy for them to be offered to each and every employee throughout an organisation, regardless of age or status.

A HCP can help individuals budget towards a wide range of everyday essential healthcare treatments, including check-ups at the dentist, eye tests at the optician, visits to the physiotherapist, as well as access to specialist consultations and a wide range of other complementary therapies.

Many companies will see one aspect such as stress in the workplace as a priority, however, it is important that intermediaries have the option to exploit a number of benefits to fit a company's needs. There is a common misconception that HCPs offer little commission, but when their affordability leads to a take up by the whole workforce, where PMI simply would not be practicable, commission can be substantial and more importantly, ongoing.

Once the sale is made, intermediaries can normally be assured of a long-term income with little administration and long product life expectancy. Companies and intermediaries will see real innovation from the leading HCPs providers in forthcoming months, more so than at any time in the last 50 years. A new breed of hybrid healthcare cash plans has evolved to serve consumer and corporate requirements and the result may be far removed from the traditional concept of HCPs as recognised today.

The move towards non-traditional HCPs has already started and early changes in product and requirements have already seen an upturn in sales through the intermediary channel for some providers. The future will inevitably bring change, but HCPs are in a relevant and strong position and will evolve to meet the changing needs that the future will bring.

- Raman Sankaran is the director of strategic development at Healthsure.

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