Spark Spotlight – Health Insurance
The current playing field
Covid 19 has impacted most sectors of business, but here the Spark team looks at one of those most directly affected – the Private Medical Insurance (PMI) sector.
The prevalence and role of private healthcare differs enormously across markets, but in many of these markets we have seen the lines blur between public and private systems.
In Ireland for example, while 45% of people have PMI, the Government took the decision in March to make 19 private hospitals part of the public health system for the duration of the pandemic.
What does this mean for consumers?
Essentially, those with PMI are currently receiving a lot less bang for their buck at the moment – many of the services in their policies are unavailable. Looking at the simple economics of the situation, you had a lot of people on the demand side with reduced resources at the same time as a perceived lower value product on the other. It is not surprising to hear a lot of discussion at the moment in the media about people considering cancelling their policies.
Of course, waiting periods, gaps in cover and lifetime loadings all serve as deterrents, but nonetheless, the sentiment of questioning value is not surprising. In Ireland, on April 16th (a month into the lockdown period) health insurers announced a reduction in premium costs for the period of reduced service availability. Research conducted by Spark however shows health insurers were seen as behind the curve in their response, compared to the likes of supermarkets and even banks.
The issue may come down to whether or not people need the services during this period. If you don’t need to use it, then you receive zero tangible value now but have a sense of reassurance and the promise of future availability. This sounds very much like the general reality of insurance for many of us. Is the premium reduction enough to keep most people on side? The industry hopes so…
Should we expect revolution in the sector?
Some have suggested that major rethinks will occur in relation to the overall healthcare system and the role of private healthcare within that. After all, crisis can breed major change, and the National Health System (NHS) in the UK came about on the back of WW2.
What’s more likely is that the system won’t change a lot when we emerge from Covid 19, but there are some potential outcomes:
- How people access services may change – people may be more open to remote consultations and engaging HCPs through remote channels, and this could make for a difference in how health insurers structure their offering and benefits
- Potential increase in demand for PMI – optimists in the industry will hope that the pandemic will get more people to consider having health insurance. In Asia, for example, post SARS there was a boost in critical illness policies, and health insurers might hope to see consideration levels increase.
What does this mean for health insurers?
The big unknown for many insurers right now is just how long the private system remains subsumed in the public system. Once they do emerge however, the questions will be about whether the size of the customer base has been affected, and whether engagement with their services and offering will have changed. In terms of coming out as well as possible, there is a challenge for insurers to be able to demonstrate the value of their offering in the right way.
Needless to say, understanding consumer sentiment on the role of PMI in their lives is fundamental when it comes to being equipped to rise to the challenge.
For HSE guidelines around Covid -19 please visit the HSE website.