THIG deal rounds up ‘the year of acquisitions’

The Health Insurance Group (THIG) has become the latest healthcare intermediary to be snapped up by insurance giant AXA, after a year that has seen a raft of broker acquisitions by both insurers and intermediaries.

The THIG acquisition was completed last month through AXA’s subsidiary Venture Preference (VP), which has increased its gross written premium from zero to £500m in eight months.

Other acquisitions by VP this year include the intermediaries Layton Blackham, Stuart Alexander, Smart & Cook and the Davis Group. AXA has also acquired specialist healthcare intermediary Essential Healthcare through its SecureHealth subsidiary and employee benefits consultancy PIFC Consulting through Thinc Group, which it also owns.

Stuart Reid, joint chief executive of VP, said the THIG acquisition would not inevitably result in the broker selling more AXA PPP healthcare products.

“That is absolutely not the case,” he said. “First, if we did that we wouldn’t be attractive to future sellers. Also, we wouldn’t be able to offer a full range of services and choice to potential clients. The Financial Services Authority (FSA) would also call into question such an arrangement. Most importantly, we wouldn’t be able to trade as effectively.”

He added that AXA has learned lessons from past experiences, including overseas where it had hoped the intermediary ipac – a wholly-owned subsidiary of AXA Asia Pacific Holdings – would sell more AXA products.

But many intermediaries are worried about the impact that broker acquisitions could have on the market. John Dean, head of healthcare at Punter Southall Financial Management, warned that insurers could gain a great deal of power by buying intermediaries.

“Over half of UK private medical insurance (PMI) premiums are placed by 10 brokers and if an insurer owned one it would have an immense ability to move the market,” he said. “If too much power is held in a small number of hands the market can be manipulated.”

AXA has stated that the main reason behind its acquisitions is to get closer to the end customer and better understand their needs. But Dean suggested this is not the most effective way of getting closer to the end customer.

“The easiest way for an insurer to get closer to a customer is to visit them or hold feedback groups and user groups,” he added.

Dean believes further acquisitions by providers are in store next year. Indeed, VP’s stated aim, for example, is to control £1bn of gross written premium by 2010.

“When a big insurance company buys brokers it will force others like Norwich Union, Standard Life and BUPA to do the same,” he said. “Something might happen with the regulator, or brokers will acquire other brokers in order to protect themselves.”

Acquisitions of brokers by fellow intermediaries are already gathering pace. Private healthcare intermediary the ADVO Group recently announced that it was buying specialist advice firm Health Plan, following an array of broker acquisitions earlier in the year by intermediaries such as Jelf Group, Chase Templeton and the Private Health Partnership.

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