“Many products that are presented as modular are not truly modular. They have just reduced the price of their core product and then bolted add-ons to it. Modular is a product in its own right,” says Briggs.
HSA’s modular product, Personal Medical Plan (PMP), was developed with specific cost saving in mind. According to a study by the insurer only 10% of people would consider buying traditional PMI to help pay for the costs of healthcare, and 36% of respondents believed it to be unaffordable. A further 28% feared they would waste money by paying for medical cover that they did not need.
“PMP was launched in 2004 as part of HSA’s commitment to continue developing healthcare products that are accessible to the majority rather than the privileged few,” says Suzanne Clarkson, head of corporate marketing at HSA. “With PMP [which has a core level of cover] you can choose from four modules to design a product that suits your needs and it only costs from £11 per month.”
Reduced cost, however, means reduced cover, and while this may seem reasonable, the average person on the street might not be aware that their plan is not covering treatment that would normally be accepted by traditional PMI.
“One of the reasons why insurers have separated it all out is because of the cost – whereas we have full cancer cover with no restrictions – plus you can have all the benefits. It is piece of mind, and it is what medical insurance should be. Not the Big Fear of the Big C,” says Lisa Doyle, operations manager at the private client division at WPA, which insists on a core level of cover for its modular product. “Being an easy sell does not necessarily make it a good product.”
WPA considers that even a flexible product should offer a set coverage. “We have stayed with a core level of cover because experience and tried and tested reporting has told us that the areas that are covered under the policy are the areas that are used most by individuals when they claim,” says Doyle.
Rolland from L&G disagrees that confusion will become a problem with modular plans.
“The way to avoid confusion is to make it clear upfront what they are buying, otherwise there is the potential that consumers pay for things that the scheme is not designed for, or they are let down by their insurance. This is not something that any business wants to happen and it may end up in complaints further on down the line,” he says.
That said, it seems obvious that since a customer will choose the areas that they want to be covered for, there will be a certain level of understanding.
“While the level of coverage is limited to a person’s budget, this is the same for any product you buy. The reality is, the more affordable it is, the less it will cover,” says Rolland.
One way to improve clarity for the customer is to check the fine print – generally the fewer clauses or limits, the easier it is for the customer to understand.
Other insurers admit that the product may be complicated, which is why they have decided not to go down the direct sales route.