Paul White, head of risk benefits consulting at Aon Consulting, says: “Sharing the information with insurers enables them to understand that price is not the only criteria and that employers may be willing to place business with those charging higher premiums if service is important to them. Similarly, we can use the survey to drive service improvement from insurers and can remove an insurer from our list of providers if its service is shown to be particularly poor.
“Unlike medical expenses insurance, where administration has always been a key criterion in who should carry the risk, group risk insurers have traditionally adopted the view that the key determinant of where business is placed has been price. Using this model, either consciously or sub-consciously, insurers have been willing to sacrifice service if it means keeping price low. But this approach is fundamentally flawed because employers make rational decisions based on factors such as price, contract terms and insurer service.”
While clients of Aon Consulting may well be taking such an enlightened approach, it is clearly not yet happening industry-wide because, if all employers were voting with their feet, some insurers would be shedding schemes like scales from a fish. But, if such objective research was generally available, a little public naming and shaming could possibly help.
We should, however, be grateful for at least one small mercy in the group risk arena. Discussion of “integrated healthcare” seems to be making the transition from 24 carat waffle to referring to concrete actions. A couple of players have finally put their money where their mouth is to reflect their belief that a holistic wellness model can reduce insurance claims. Norwich Union Healthcare and BUPA now offer a structured matrix of discounts to employers who take one or more products from a menu of group critical illness cover (CI), income protection (IP), life, PMI and wellness and absence management type services.
BUPA has been offering discounts of 5% to 30% since October 2007, when it also restructured its entire business as an integrated whole that no longer subdivides between wellness, PMI and group risk.
Lee Lovett, head of specialist sales at BUPA, says: “Feedback from the market suggested we weren’t sufficiently joined up and that our reps were often not aware that other BUPA colleagues had called on the same company. We have therefore put together a two year training programme to enable our reps to represent us over the product range. Eventually we will just use one rep per client and, although we may have to use several reps with the same client at the moment, at least their visits will be coordinated.”
In December 2007, Norwich Union Healthcare, which has not undergone any such official restructuring, introduced a similar broad range of discounts. It has also gone a step further by offering corporate clients 5% to 25% premium discounts on individual home, motor and travel insurance policies.
Demand for group risk products via flex continues to grow steadily and, as far as CI is concerned, flex represents the only real growth area. Although CI researches well with employees, it continues to be a low priority for employers seeking to offer company-paid health cover.