Chief executive says provider is ‘still looking for scale’ after Groupama Healthcare deal
Simplyhealth has plans to grow its share of the overall private medical insurance (PMI) market to 10%, its chief executive has said.
Des Benjamin (pictured) said that while the planned acquisition of Groupama Healthcare, announced earlier this year, will see Simplyhealth’s underwritten book grow from around £95m to £150m, the provider is “still looking for scale”.
In an exclusive interview with Health Insurance, Benjamin, who has overseen ten other acquisitions and the formation of a single Simplyhealth brand during his tenure, said he has ambitions for the organisation to grow still further, although at a pace that is appropriate.
“We want to get to 10% of the market and then consider our options,” he said. “We don’t have an ambition to be market leader or number two or number three. We think at 10% of the market we’ll have enough scale, enough ability but then we want to focus not just on PMI or cash plans but on the middle ground because we believe that’s fertile ground for the 40 million people who have neither.”
After the Groupama Healthcare acquisition is complete – it is currently being held up due to workloads at the Financial Services Authority – Simplyhealth’s market share will grow from 3% to 4.5%. Including healthcare trusts, Simplyhealth’s overall private medical market share will be around 6% once the Groupama Healthcare deal goes through.
According to Benjamin, the three attributes that Groupama Healthcare offered are key to winning in the PMI industry: “the cultural fit”, “the quality fit” and “additional scale”.
“That [scale] helps with everything from hospital negotiations to the spreading of risk profile,” Benjamin said. “It helps because they have got some very high quality service capabilities and good management within their organisation. We’ll learn a lot from them but we’ve got a lot to offer them too.”
However, it is “much too early” to reveal who will form the management team once the two businesses are brought together.
“We’ve got a team led by Matt Wilson that is going through a meticulous planning process that will take its time to work out what goes where and when,” he said. “We’re not rushing that. In the meantime, the first people to know what if any changes that come along will be the staff.”
Equally, no decisions have been made yet on office locations and service centres. For the time being, Simplyhealth’s business is still being run out of Bristol, while the Groupama Healthcare business, which has around 120 staff, is still being run out of Letchworth, where the lease continues until 2017.
Benjamin insists that the entire integration will be done at a measured pace.
“We can take our time to make our decisions cleverly and clearly,” he said, adding “over years, not months, the two businesses will be brought together but at a speed that works for the customers."
In terms of product development, Benjamin said that the “best parts” of Santé (Groupama Healthcare’s product) and Preferential (a Simplyhealth product) will be brought together next year. Brokers, Benjamin said, will be kept up to speed throughout the integration.
“Brokers need to know clearly what our milestones for change are,” he said. “Those we will communicate with them at the earliest opportunity. They’re very important. But it’s very much business as usual at the moment.”
Around 90% of Simplyhealth’s business currently comes through brokers and the acquisition of Groupama Healthcare – a broker-only business – underlines the organisation’s commitment to the intermediary channel, Benjamin said. He concedes, though, that there will be growth in the amount of direct business on Simplyhealth’s books.
“I expect us to do more business directly in the future but I also expect us to be working with a collegiate set of brokers who we understand and who understand us and I expect to do so for a very long time,” he explained.
“A very long time” could very well prove to be just that for an organisation that has been around, in one form or another, since the 1800s.
“I believe Simplyhealth is being built to be one of the health institutions of the 21st century which is fundamentally trusted,” Benjamin said. “That’s where it’s going and that’s what I’d ask our partners to take as the reason for being part of it.”