Strong opinions in a robust market

Are alarm bells really ringing in the health insurance market? They aAre alarm bells really ringing in the health insurance market? They are in the office of Association of Medical Insurance Intermediaries (AMII) chairman Larry Bulmer.

"We're having an alarm installed," he explains while surveying his newly renovated office and apologising for the noise. This office is also home to Bulmer's own health intermediary company Health Decisions, which he started six years ago.

Health Decisions specialises in private medical insurance (PMI) in the corporate sector, which is probably why Bulmer is so opinionated about the recent Buck and Willis report which suggested 70% premium increases for the next five years.

"The report concentrated on a small but significant part of the marketplace," he says in his mild cockney accent.

"It looked at a particular type of market, the experience-rated market. It has been under-costed in the past because insurers have been looking for critical mass." Bulmer doesn't mince his words. "Over the past few years, insurers have perhaps taken a different view and have begun to price more appropriately and this has resulted in some sharp increases. A combination of that and a combination of people using the NHS has caused the experience-rated market to be costed much closer to, perhaps, other non-experience rates."

New business
Bulmer suggests the market is far more robust than the Buck and Willis report suggests. "Companies are still paying large premiums for health cover," he says. "But PMI does have a defined cost which is an advantage."

Bulmer says PMI has doubled in price over the past five years and is now reaching a plateau. "There is more new business coming to the market which will help with the plateauing out. We have found that there have been more inquiries and requests for new schemes from insurers, " he said. Bulmer could not think of a specific reason for this trend, but suggested that the increased National Insurance contributions could be a mitigating factor.

"I think if you ask most people, you'll struggle to find someone who thinks this money will help the NHS. Pump loads of money in and nothing will happen," Bulmer says very emphatically. "It's very important to note that the debate on health funding is a shut book. The current system is very entrenched in the national psyche."

Bulmer raises a crucial point in the debate when he reasons that the NHS is essentially insurance, but very badly managed. He reckons this is where PMI can come in handy.

"We need to incentivise people to take out PMI and then you will start to get more of a mix," he says. "But you also need to look at the situation and maybe the NHS has to plough more money into the big stuff like cardiology and oncology and you need to incentivise people to take out PMI for other concerns."

Bulmer stresses that PMI is a "good thing" despite many seeing it as bad and perhaps unnecessary. "Some members of the public think PMI takes the nurses and doctors out of the system and have this idea that consultants do seven days a week private and five minutes on a Saturday morning for the NHS. But there has to be the opportunity for consultants to earn good money, otherwise they may leave the country."

Bulmer gets a little more heated at this point. "Look, everyone's insured at the moment, but only insured over one system which has not been working for many moons, so what are we going to do? Are we going to throw money at that system? Or perhaps if you encourage people to go into a different type of insurance maybe that would encourage more people into PMI?

"And the more people that come in, the more the premiums come down. You can choose how you want to do it. You could have high excesses and low premiums or self-pay. All you're doing is giving people choice."

Intermediary help
Bulmer suggests that the NHS is Europe's biggest employer and "it's like Sierra Leone. It's just not going to be efficient," he says. "And there's no one really putting in the controls there. How can it work?"

This is where the role of health intermediaries becomes even more important. He says intermediaries can help to explain more fully what the PMI product entails and the options available. "It's not as expensive as you think either. It costs half as much as smoking," he says.

"Sky Sports costs more than PMI. What's more important? People have this idea that you don't need it because you have the NHS, but the stark reality is that the NHS doesn't live up to the expectations."

Bulmer says he is promulgating these ideas through AMII. He says looking at alternatives is paramount and insurer innovation is key, but he's not necessarily sure they've got it right. "There are some innovative things coming out but I'm not sure insurers have necessarily actually cracked it," he says.

"Perhaps intermediaries need to look more closely at how we're marketing the products. Just marketing a traditional PMI product may not be appropriate. We need to look at marketing as a range of solutions and start to look at customer concerns, issues and worries, and look at other insurance policies or cash plans, for example."

Bulmer reiterates that he discusses these aspects with AMII members regularly and encourages them to "look beyond traditional boundaries".

He has been chairman for 18 months and is up for re-election in April. He says there are 100 members in the association and only 130 PMI-specific brokers in the country.

Adding value
"The other thing I say to our members is that we need to add value in corporate PMI. Some of the smaller brokers need to look at this very closely," he says. "They need to look at the occupational health of the company, stress and trauma event counselling and health screening, for example. This may not generate immediate revenue, but intermediaries need to look at the company as a whole. Litigation is also a concern."

He reckons health insurance is a big and complicated marketplace where many people are badly advised.

"This is why the intermediary is so important. I like the idea of buying PMI online, but there is some reticence in that people have an aversion to putting their health histories on the internet. It is good for collating information, but not too many transactions are effected online."

Public perception
Inevitably the subject of regulation comes into the conversation and Bulmer voices his concern about PMI being classed as a high risk product. He said AMII is putting together a submission to the FSA to say that both intermediaries and insurers have the general consensus that PMI should be a low-risk product. He says that the public perception of health insurance could be damaged if the public does not quite understand that the policies are not as risky as they sound.

"If the FSA uses this as general terminology then perhaps people will think the company will not pay out, or would go bust and it sounds awful," he says.

But Bulmer does agree with the notion that intermediaries should take exams in order to sell high risk products. He says even if someone has worked in the business for years, they should not be scared to test their skills.

Bulmer worked for five years on Bupa's sales team and then established his own brokerage over six years ago.

Despite dedicating his professional life to health insurance, Bulmer loves to travel. And if possible, combine travelling with football. "I'm a big Leeds fan and also follow the England team and see them play abroad," he says.

The alarm interrupts the conversation again and Bulmer sighs, but surveys his office with some pride. He's happy here and is very possibly gearing up for another term as AMII chairman.
re in the office of Association of Medical Insurance Intermediaries (AMII) chairman Larry Bulmer.

"We're having an alarm installed," he explains while surveying his newly renovated office and apologising for the noise. This office is also home to Bulmer's own health intermediary company Health Decisions, which he started six years ago.

Health Decisions specialises in private medical insurance (PMI) in the corporate sector, which is probably why Bulmer is so opinionated about the recent Buck and Willis report which suggested 70% premium increases for the next five years.

"The report concentrated on a small but significant part of the marketplace," he says in his mild cockney accent.

"It looked at a particular type of market, the experience-rated market. It has been under-costed in the past because insurers have been looking for critical mass." Bulmer doesn't mince his words. "Over the past few years, insurers have perhaps taken a different view and have begun to price more appropriately and this has resulted in some sharp increases. A combination of that and a combination of people using the NHS has caused the experience-rated market to be costed much closer to, perhaps, other non-experience rates."

New business
Bulmer suggests the market is far more robust than the Buck and Willis report suggests. "Companies are still paying large premiums for health cover," he says. "But PMI does have a defined cost which is an advantage."

Bulmer says PMI has doubled in price over the past five years and is now reaching a plateau. "There is more new business coming to the market which will help with the plateauing out. We have found that there have been more inquiries and requests for new schemes from insurers, " he said. Bulmer could not think of a specific reason for this trend, but suggested that the increased National Insurance contributions could be a mitigating factor.

"I think if you ask most people, you'll struggle to find someone who thinks this money will help the NHS. Pump loads of money in and nothing will happen," Bulmer says very emphatically. "It's very important to note that the debate on health funding is a shut book. The current system is very entrenched in the national psyche."

Bulmer raises a crucial point in the debate when he reasons that the NHS is essentially insurance, but very badly managed. He reckons this is where PMI can come in handy.

"We need to incentivise people to take out PMI and then you will start to get more of a mix," he says. "But you also need to look at the situation and maybe the NHS has to plough more money into the big stuff like cardiology and oncology and you need to incentivise people to take out PMI for other concerns."

Bulmer stresses that PMI is a "good thing" despite many seeing it as bad and perhaps unnecessary. "Some members of the public think PMI takes the nurses and doctors out of the system and have this idea that consultants do seven days a week private and five minutes on a Saturday morning for the NHS. But there has to be the opportunity for consultants to earn good money, otherwise they may leave the country."

Bulmer gets a little more heated at this point. "Look, everyone's insured at the moment, but only insured over one system which has not been working for many moons, so what are we going to do? Are we going to throw money at that system? Or perhaps if you encourage people to go into a different type of insurance maybe that would encourage more people into PMI?

"And the more people that come in, the more the premiums come down. You can choose how you want to do it. You could have high excesses and low premiums or self-pay. All you're doing is giving people choice."

Intermediary help
Bulmer suggests that the NHS is Europe's biggest employer and "it's like Sierra Leone. It's just not going to be efficient," he says. "And there's no one really putting in the controls there. How can it work?"

This is where the role of health intermediaries becomes even more important. He says intermediaries can help to explain more fully what the PMI product entails and the options available. "It's not as expensive as you think either. It costs half as much as smoking," he says.

"Sky Sports costs more than PMI. What's more important? People have this idea that you don't need it because you have the NHS, but the stark reality is that the NHS doesn't live up to the expectations."

Bulmer says he is promulgating these ideas through AMII. He says looking at alternatives is paramount and insurer innovation is key, but he's not necessarily sure they've got it right. "There are some innovative things coming out but I'm not sure insurers have necessarily actually cracked it," he says.

"Perhaps intermediaries need to look more closely at how we're marketing the products. Just marketing a traditional PMI product may not be appropriate. We need to look at marketing as a range of solutions and start to look at customer concerns, issues and worries, and look at other insurance policies or cash plans, for example."

Bulmer reiterates that he discusses these aspects with AMII members regularly and encourages them to "look beyond traditional boundaries".

He has been chairman for 18 months and is up for re-election in April. He says there are 100 members in the association and only 130 PMI-specific brokers in the country.

Adding value
"The other thing I say to our members is that we need to add value in corporate PMI. Some of the smaller brokers need to look at this very closely," he says. "They need to look at the occupational health of the company, stress and trauma event counselling and health screening, for example. This may not generate immediate revenue, but intermediaries need to look at the company as a whole. Litigation is also a concern."

He reckons health insurance is a big and complicated marketplace where many people are badly advised.

"This is why the intermediary is so important. I like the idea of buying PMI online, but there is some reticence in that people have an aversion to putting their health histories on the internet. It is good for collating information, but not too many transactions are effected online."

Public perception
Inevitably the subject of regulation comes into the conversation and Bulmer voices his concern about PMI being classed as a high risk product. He said AMII is putting together a submission to the FSA to say that both intermediaries and insurers have the general consensus that PMI should be a low-risk product. He says that the public perception of health insurance could be damaged if the public does not quite understand that the policies are not as risky as they sound.

"If the FSA uses this as general terminology then perhaps people will think the company will not pay out, or would go bust and it sounds awful," he says.

But Bulmer does agree with the notion that intermediaries should take exams in order to sell high risk products. He says even if someone has worked in the business for years, they should not be scared to test their skills.

Bulmer worked for five years on Bupa's sales team and then established his own brokerage over six years ago.

Despite dedicating his professional life to health insurance, Bulmer loves to travel. And if possible, combine travelling with football. "I'm a big Leeds fan and also follow the England team and see them play abroad," he says.

The alarm interrupts the conversation again and Bulmer sighs, but surveys his office with some pride. He's happy here and is very possibly gearing up for another term as AMII chairman.