“They would make ideal acquisitions for larger brokers if they could find them but that is difficult at the moment,” he said. “There are various models, but any transactions going through now are at a lower multiple on either formula than they were 12 months ago.”
“Intermediaries and providers who are willing to actually listen to what clients are looking for and respond to that, be flexible and think differently will do very well,” said PruHealth’s Tal Gilbert. “Those that do not will suffer. The pressures of the economic climate just will not let people stand still. That applies both in the individual and the company markets. If you are responding to what customers are looking for, which will probably be around value for money, certainty and trusted brands, then I think there will be opportunity there. If you are responding to what employers are looking for, which again is value for money, but delivering to the business need and helping to keep the workforce productive and healthy, helping them to deal with absenteeism, then I think people will do well.”
While the panel expressed no doubt that consumers and companies are spending less, Gilbert stressed that people still rank their health and the health of their family at the top of the list.
“Employers more so than ever need the people who are staying at work to be productive and to be healthy and so the core demand is there,” he said. “There actually really is opportunity and if you look two to three years ahead as the economy starts to recover more and as the impact of the government finances on the NHS starts to play out, the market should actually be in very healthy shape.”
However, the majority of participants expected tough market conditions to persist. The Private Health Partnership’s Stuart Scullion said that while his own business might be in a different position, over the next 12 months he expects to see wider market contraction.
“I don’t think it will be 10% but I wouldn’t be surprised if it was 5%,” he forecast. “There is and there will be increased competition for distribution. We need to make sure that the proposition meets the clients’ needs but we have a responsibility to make sure that we get the client to understand what those needs are.”
Intermediaries need to stay “lean and focused”, Scullion said, adding that “the strong will flourish and the weak will die”.
“However, a recession and a crisis financially does not mean that our business has to shrink,” he said. “It means it has to be better at what it does.” Simplyhealth’s Jack Briggs threw down a similar gauntlet to all parties involved in the PMI market.
“If we can get compelling propositions that people believe are relevant to their needs and if we can engage more intermediaries to do that as opposed to simply comparing prices then I am reasonably optimistic,” he said. “If we can’t and all we get is just round after round of more and more price comparison and more and more intermediaries chasing big and bigger commissions, then…”