Brokers and providers in the small group PMI industry might think they have it easy. But, as Edmund Tirbutt’s market overview suggests, they might just be enjoying the calm before the storm
Lack of innovation does not have to be a hanging offence, especially if no-one is complaining about it. It can simply be a sign that a particular market is largely at ease with itself, and this seems to be the case with the small to medium sized enterprises (SME) private medical insurance (PMI) market. The prevailing attitude among providers in this neck of the woods is simply that there is little point in rocking a boat that is sailing along quite nicely.
Most insurers that focus on SMEs already now have modular products and seem reasonably pleased with them and also with prevailing market conditions. SME business is stressed to be far less volatile than large corporate business, with some intermediaries and providers revelling in retention rates of over 90%. Unlike their larger counterparts, SME schemes do not tend to be routinely hiked around the market at renewal to see if the current terms can be bettered anywhere else. So those who look after them properly are far less likely to lose them.
Although the SME market is highly competitive and any easy pickings that used to be available have pretty much already been gobbled up, it is definitely still growing. “Steady as she goes” and “still reasonably buoyant” are the sorts of phrases currently rolling off the tongues of provider spokespeople, and 10% to 15% are the sorts of annual growth rates they are reporting for 2007.
Claire Ginnelly, head of business development at Groupama Healthcare, says: “We are not looking to launch any further new products as the feedback is that our Santé product works and that people like its modular format and the fact that it is fairly straightforward as well as flexible. I feel the market has reached a point at which there is no great need for further innovation, although we are still always talking to our brokers to check that the product continues to meet their needs.
“We are focused almost entirely on the SME market, which we see as the growth area because small companies still remain the main growth sector of the economy. The interesting thing that has started to happen in the last few months is that we are getting a lot more brokers introducing virgin business and reporting enquiries for potential virgin business.”
CIGNA HealthCare is noticeably less openly content than the other players, but can hardly be condemned as a pocket of outright negativity. Having started trying to edge its way back into the SME market in late 2005, it is not too gushing about its recent experiences but seems confident enough going forward.
Kirsty Jagielko, group product manager health benefits at CIGNA HealthCare, says: “The last couple of years have been a baptism of fire because the servicing of the administration side has proved more difficult than expected. With big companies and big brokers you don’t have the same high volume of quotes and you are installing small numbers of large schemes rather than large numbers of small schemes. It has been a steep learning curve but we are making steady progress and feel we will accelerate now we have adapted our proposition to the market’s requirements.”