A Practical Guide to

JULY 2010 n What are cash plans? n Myths and facts n The customer experience n Absence and employer benefits n Sales techniques n Potential clients A Practical Guide to Selling Cash Plans in association with 1 EXPERT INSIGHT INTO KEY AREAS OF THE HEALTH INSURANCE INDUSTRY

INTRODUCTION Health Insurance Informa UK Limited Telephone House, 69-77 Paul Street, London EC2A 4LQ fax: 020-7017 4194 tel: 020-7017 + extensions as below Editor David Sawers ext.4154 david.sawers@informa.com Deputy editor Madeleine Davies ext.5581 madeleine.davies@informa.com Supplement contributor Emily Perryman Sales director Matthew Brookes ext.6779 matthew.brookes@informa.com Key account manager Annalisa Russell De Clifford ext.4124 annalisa.declifford@informa.com Designer Paul Pancham Marketing manager Louise Canfield ext.4088 louise.canfield@informa.com Customer services department insurance.enquiries@informa.com Member of the Audit Bureau of Circulation Average net circulation for the period 1 July 2008 to 30 June 2009 10,003 ISSN: 1477-9781 Health Insurance is published by Informa Communications a trading division of Informa UK Limited Annual subscription: 253 For subscription queries and enquiries, or back issues, please contact Customer Services Department, Informa UK Limited, Sheepen Place, Colchester, CO3 3LP, UK Tel: 020 7017 5532 Fax: 020 7017 4781 Email: insurance.enquiries@informa.com Informa UK Limited, all rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electrical, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Printer: ESP Colour Cash plans are you in the know? How cash plans can help switched-on brokers to grow their business Regular readers of Health Insurance will know that health cash plans have long been a popular employee benefit, valued by employees and businesses alike. Built on a strong heritage, the product has adapted to market conditions and is now a powerful and sophisticated tool in any successful broker s armoury. However, there is still huge potential out there for growth. Many intermediaries are simply unaware of just what the product has to offer, both to their clients and to their income streams. Some brokers believe mistakenly that cash plans are time-consuming and don t deliver much in terms of commission. Those intermediaries fail to recognise, however, just how straightforward it can be to recommend cash plans to their clients. Administration has come on in leaps and bounds over recent years and cash plan providers go to great lengths to ensure that the product is simple to maintain throughout the year and at review. Those efforts have helped to meet another common objection raised by some intermediaries that cash plans simply aren t worth their time. The fact is that by recommending cash plans, switched-on brokers can secure regular and solid income streams that they would otherwise miss out on. And in today s economic climate, that kind of revenue is even more valuable than before. Of course, there are also brokers and advisers who are simply unaware of cash plans as a concept. Some simply don t know they exist, while some believe they are a cheap and cheerful replacement for private medical insurance. Those in the know, of course, realise that this simply isn t the case. Used correctly, cash plans can help to keep PMI affordable while offering additional benefits for employers and employees alike. This guide has been designed to be a practical, user-friendly tool for you and your colleagues to use to build or begin to build your cash plan portfolio. I hope you find it useful. www.himag.com David Sawers, Editor A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 3

SETTING THE SCENE Setting the scene Cash plans have been around for more than 100 years to help people meet everyday healthcare costs. The schemes began as workmen s Saturday Funds, which collected small sums in support of voluntary hospitals. Now, cash plans cover a wide range of benefits such as eye care, dental treatment, physiotherapy and complementary therapy. Unlike insurance, which protects an individual against the risk of an uncertain event occurring, cash plans are made up of benefits that individuals will actually use. Most people will visit the dentist twice a year and many will need a new pair of glasses or treatment for a bad back; cash plans will pay out cash sums to help with the reimbursement of all of these expenses. Cash plan providers offer between three and five benefit levels to choose from and the more the individual or employer pays per week or month, the higher the level of benefit provided. EMPLOYEE BENEFIT Health cash plans are increasingly sold to employers as an employee benefit, either on a company-paid, voluntary or part-paid basis. The schemes cost from 1 per employee per week and are an affordable way of encouraging employees to look after their health. Most providers offer flexible company-paid schemes which allow employers to add on extra benefits such as an employee assistance programme or allowances to help cover parking and other costs associated with hospital stays. Howard Hughes, head of intermediary marketing at Simplyhealth, says company-paid cash plans have become increasingly popular in recent years. Traditionally cash plans were bought by individuals for themselves or via a voluntary scheme. Now there is a big growth in company-paid benefits. In 2007 they grew by 27% and in 2008 they grew by 29% and I expect this trend to continue. Providers are focusing on this area and employers have recognised that cash plans allow them to offer employees low cost, high value benefits. CASH PLANS AND PMI One of the biggest advantages of cash plans is they can be extended to everyone within an organisation, unlike private medical insurance (PMI) which due to its high cost is usually preserved for senior management. Cash plans can also sit alongside PMI to help reduce overall healthcare benefits spending. An employer can introduce an excess on their PMI which will lead to an immediate reduction in premiums. They can then encourage employees to use a cash plan for smaller claims, such as initial consultations and physiotherapy, thus minimising premium increases in the future. Cash plans allow intermediaries to build depth and breadth throughout the organisation, adds Hughes. It is a good opportunity to talk about something new, rather than just churning PMI. TYPICAL ADVANTAGES OF A CASH PLAN No medical underwriting required before joining Can be used towards the cost of dental and optical treatment plus many other categories Children under 18 are usually included free of charge when one parent is covered Premiums do not increase with age 4 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

SETTING THE SCENE THE HISTORY OF CASH PLANS The hospital contributory scheme movement begins with the workmen s Saturday Funds, which collect small sums in support of voluntary hospitals. Funds restructure themselves to provide cash benefits during periods of sickness, along with convalescent, dental and optical care. The total number of cash plan contributors edges downwards in the 21st century, but demand for companypaid cash plans increases. Funds grow into a national network providing cheap insurance against the risks of hospitalisation for low income families. Some 10 million people are covered. There is a rapid growth in cash plan contribution income, driven by a buoyant economy and rapid growth in healthcare provision in both the public and private sectors. 1910 1948 1965 1990 1870 1930 1950 1980 2000 Funds are extended to include dental treatments and optical benefits. Demand for cash plans reaches a peak of around four million contributors before declining in the 1970s and 1990s. The NHS is born, but Saturday Funds are given no place by policymakers. Many schemes decide to carry on, encouraged by Aneurin Bevan s statement that they should look to see where the shoe pinches and then meet those needs. Demand for cash plans reaches a peak of around four million contributors before declining in the 1970s and 1990s. A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 5

MYTHS & FACTS Cash plans the myths and the facts Some brokers have misconceptions about cash plans, while others simply don t know much about them at all. Here are some myths and facts about the health insurance industry s best kept secret MYTH CASH PLANS ARE COMPLICATED AND DIFFICULT TO UNDERSTAND FACT Intermediaries who are new to the cash plan industry sometimes regard cash plans as complicated products that are hard to understand, but this is far from the truth. Most products generally cover the same benefits dental treatment, optical cover, physiotherapy, alternative therapies and hospital cover so comparing cash plans is relatively easy. The way cash plans work is also straightforward: the policyholder makes a monthly payment and when they have medical treatment they send the receipt to the provider who then pays cash into their bank account. Most providers have now moved to 100% cash back on treatment which makes things even simpler. FACT COMPANY-PAID CASH PLANS ARE ON THE RISE FACT Company-paid cash plans have seen the highest growth rate of any health-related benefits in recent years. The latest research from industry analyst Laing & Buisson shows that in 2008 spending on health cash plans grew by 4.3% to reach 503m. Spending on company-paid cash plans jumped by 29% following a 27% increase the previous year. Part of the reason why company-paid cash plans are on the rise is that providers have been placing more focus on this area in order to appeal to the broker market. Employers are also recognising that cash plans allow them to offer employees high value benefits at a very low cost. MYTH CASH PLANS ARE ONLY FOR BLUE COLLAR WORKERS FACT When cash plans were first launched back in the 19th century their primarily purpose was to act as workmen s Saturday Funds which collected small sums in support of voluntary hospitals. The plans were sold to factory workers on a voluntary basis. Nowadays, cash plans are sold in all types of companies in nearly every sector. The introduction of company-paid cash plans has enabled them to be extended to anyone within an organisation. 6 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

MYTHS & FACTS Sometimes private medical insurance (PMI) is offered to senior management and the rest of the workforce is given a cash plan. An employer can also introduce an excess on their PMI and encourage employees to use the cash plan for smaller claims in order to reduce their overall healthcare benefits spending. FACT CASH PLANS ARE BECOMING MORE POPULAR AMONG INTERMEDIARIES FACT Although the cash plan market is still dominated by direct sales by cash plan providers, there has been a growth in the number of sales made by intermediaries. Jack Briggs, sales and marketing director intermediary, simplyhealth said he has seen significant year-on-year growth from this distribution channel. Some intermediary firms are actively encouraging their consultants to talk about cash plans when they visit clients. Brokers are recognising that cash plans are another revenue stream for their business, they can save clients money if sold in conjunction with PMI, and they will get a higher level of client satisfaction by telling them about cash plans. MYTH CASH PLANS DO NOT PAY ENOUGH COMMISSION FACT A lot of brokers have not entered the cash plans market because they believe the relatively low commission rates on offer mean that selling the products is simply not worth it. In fact, cash plans can provide brokers with a steady and sustainable commission. The broker earns non-indemnity commission which is paid over a period of time so they can see income generated year-on-year. Moreover, once the cash plan has been introduced to the client there is not a great deal of additional work. The claims are settled directly between the client and the insurer and as it is a continual contract there is no renewal process. FACT CASH PLANS PAY OUT ON CLAIMS FACT A lot of people believe insurance companies will do everything possible to avoid paying claims, but with cash plan providers the situation is very different. Cash plans are there to pay for everyday healthcare expenses and providers generally want policyholders to use them. Simplyhealth, for example, will contact customers if they have not made a claim for a while and check they understand how to use the plan. The provider processes 16,000 cash plan claims everyday and pays cash directly into people s bank accounts. A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 7

MYTHS & FACTS Cash plans the myths and the facts MYTH CASH PLANS ARE TOO RESTRICTIVE FACT Cash plans cover fewer benefits than PMI but they are by no means restrictive. Although dental treatment and optical cover are usually the key selling points, cash plans cover a whole host of other benefits: physiotherapy, osteopathy, acupuncture, chiropody, maternity benefit, consultation, hospital benefit and European cover. Many also offer a free helpline with counselling on medical and other issues. The fact that the list of benefits is not endless is why cash plans are much cheaper than other health insurance products. If more benefits were added, the product would be of a high quality but it might cost more than companies and individuals are prepared to pay. FACT CASH PLANS HELP TO REDUCE ABSENCE COSTS FACT Sickness absence can have a detrimental effect on a company s bottom line. Research by the Chartered Institute of Personnel and Development found that the annual cost of absence per employee is 692. Many employers are looking for ways to minimise absenteeism and cash plans are increasingly being viewed as a cost-effective way of doing this. The plans encourage employees to look after their everyday healthcare needs by giving cash back on a range of treatments. Optical and dental benefits can help to identify a range of serious conditions such as diabetes and oral cancer which if left untreated could severely affect an individual s health and result in long periods of absence. Confidential helplines can also help to prevent stress-related illnesses, a major cause of absenteeism. According to a survey by Simplyhealth, one quarter of employers believe cash plans can help to reduce sickness absence. 8 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

MYTHS & FACTS MYTH CASH PLANS ARE A CHEAPER ALTERNATIVE TO PMI FACT Some intermediaries view cash plans as the poor relation of PMI and decide that they will only concentrate on selling the more expensive product. However, Jack Briggs, intermediary sales and marketing director at Simplyhealth, believes that cash plans are in no way an alternative to PMI. Cash plans are preventative healthcare products which pay out cash sums to help people meet their everyday healthcare costs. PMI provides cover to treat medical problems when they arise, he said. Briggs said the fear that clients will lapse their expensive PMI policies when they are told about cash plans is unfounded because each policy meets a different need and each one has a value in its own right. FACT CASH PLANS HELP EMPLOYERS TO MEET THEIR DUTY OF CARE RESPONSIBILITIES FACT Employers have a legal obligation to prevent risks to the health of their employees. Cash plans contain a number of benefits which help employers to meet their duty of care responsibilities. The optical benefit covers the cost of eye tests and spectacles for staff who use visual display units, meaning that employers do not need to pay separately for eye care. The employee assistance programmes and counselling offered by some cash plans can support staff who are suffering from stress. There are also some cash plans which address general employee wellbeing through services such as health screenings, discounted gym membership, weight management and treatments on how to stop smoking. CASH PLANS: A 60 SECOND GLOSSARY Cash plan low cost health benefit that helps employees with the cost of their everyday healthcare. If they need to pay for expensive dental care like a filling or crown, a new pair of glasses, or get help with a bad back at the physiotherapist, they can claim cash back from their cash plan provider, up to an annual limit. Employee paid/voluntary cash plan after the employer sets up a cash plan scheme, employees are then given the option of taking up the benefit by paying a small monthly contribution towards it. Company paid cash plan a low cost way for employers to reward employees by helping them pay for their everyday healthcare. A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 9

ABSENCE & EMPLOYER BENEFITS Absence and employer benefits While receiving cash back to help to pay for everyday health benefits is obviously attractive for staff, cash plans provide tangible benefits for employers too Simplyhealth in 2004 found that reducing absence and getting staff back to work as soon as possible were priorities for 47% and 44% of respondents, respectively. In the 2009 survey, 55% prioritise sickness absence and 35% prioritise getting staff back to work quickly. This suggests employers are putting greater emphasis on overall absence strategies with the aim of having fewer staff off sick long term. The chart on page 11 shows which policies employers believe can help to reduce sickness absence the most. Employees are not the only ones who benefit from having access to a company-paid or voluntary cash plan. Research shows that offering healthcare products such as cash plans reduces sickness absence and gets people back to work quickly. The 2009 Absence Management survey by the Chartered Institute of Personnel and Development shows that the overall level of workplace absence across all sectors of the economy now averages 7.4 days per employee per year, down from the eight days recorded a year earlier. The figure represents a loss of 185 million working days at an overall cost to the UK economy of 17.3bn. The survey estimates that the annual cost of absence per employee is 692. The vast majority of companies would welcome benefits that can help to reduce this cost. A survey by ABSENCE The survey suggests that most employers are meeting their priorities. More than half (55%) said their healthcare benefits have helped to improve staff health and welfare and 51% said they have helped them to be seen as a caring employer. Almost half said their healthcare perks have reduced sickness absence and helped staff return to work as soon as possible. For one quarter of employers, cash plans are seen as a cost-effective way of reducing employee absence. Staff can use them every month of the year to remain healthy, well and fit for work. They can use the plan to claim for the cost of everyday health treatments, such as dental and optical cover, physiotherapy, chiropractic treatment and acupuncture. Jack Briggs, intermediary sales and marketing director at Simplyhealth, said: If an employee can 10 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

ABSENCE & EMPLOYER BENEFITS use a cash plan to visit a dentist privately out of work hours this will reduce absence. Similarly, if a travelling salesman can get a strain in their back looked at by a physiotherapist before they can t drive any more this will also reduce absence. Cash plans help people be fit for work. PRESENTEEISM Many cash plans offer confidential helplines and counselling services which can help to prevent stress-related illnesses. More than one-third (38%) of respondents to the Simplyhealth Healthcare Research 2009 cited stress as a major cause of sickness absence, up from 29% in 2000. The table to the right shows the top five causes of absence today. DID YOU KNOW Cash plans can help to reduce presenteeism as well as absence Cash plans are also seen as a method of reducing presenteeism, where employees are at work but are not working to their full capacity. Cash plans encourage employees to go for health checks, thereby ensuring any problems are picked up before they become serious and affect the person s ability to work. Optical and dental benefits can also help to identify a range of conditions that could seriously affect an individual s health if left unchecked. An eye test can spot diabetes and high blood pressure, while a dental check-up will identify joint disease and oral cancer. While any sickness absence management policy will comprise a range of products and procedures, cash plans are a good way of protecting employees everyday healthcare needs at a comparatively low cost. WHICH POLICIES HELP TO REDUCE SICKNESS ABSENCE? Policy % of employers Sickness absence management schemes 66% Regular holidays 62% Work-life balance policies 62% Flexible working 59% Employee assistance programmes/ other stress counselling 51% Private medical insurance 50% Health screening/well woman/well man clinics 39% Pre-employment health checks 35% On-site occupational health department 30% Health cash plans 24% Relaxation/break time rooms 18% Healthy eating options in staff restaurant 16% Alternative therapies 14% Dental benefits 10% Income protection 9% Critical illness insurance 5% Other 4% Source: Simplyhealth Healthcare Research 2009 THE MAJOR CAUSES OF SICKNESS ABSENCE IN ORGANISATIONS Cause of absence % of employers Sickness absence management schemes 66% Minor ailments/flu/colds/food poisoning 79% Musculoskeletal ailments 46% Stress 38% Serious illness 21% Source: Simplyhealth Healthcare Research 2009 A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 11

CASE STUDY Reaping the rewards of a company paid cash plan How a cash plan delivered real benefits for employees at a hygiene and animal welfare company A company paid cash plan is a valued benefit for staff. Those who wear glasses, have a back complaint or just regularly attend their dentist checkups can all reap the rewards. They can claim money back towards their costs, up to an annual limit, helping them to stay on top of their everyday healthcare needs. Hall Mark Meat Hygiene is a company that enables food business operators to achieve the highest standards of hygiene and animal welfare. It works in over 200 food business operators across the UK. The I find the plan really helpful and use it a lot for my backache; I see the osteopath as much as I can company is committed to the long-term health and wellbeing of its people and in 2005 decided to implement the Simply Cash Plan for all permanent staff. 12 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

CASE STUDY The plan helps staff stay on top of their regular trips to the dentist and optician and covers them for routine checkups and emergency appointments. They can also use it to claim money back on complementary therapies such as physiotherapy, osteopathy, chiropody, podiatry, chiropractic, acupuncture and homeopathy. Monica Racero, a team leader at Hall Mark Meat Hygiene has claimed money back for her dental and chiropractic treatment. She was surprised at just how easy it was to submit a claim: The plan is really well known. I use it mainly when I go to the dentist, so when I asked them whether I could have a receipt to send it to Simplyhealth they said oh yes, and already knew about it. The first time I used it I said to myself let s see what happens but it was so quick and easy. If my company didn t pay for the plan, I would take one out personally because it is useful; it is very easy to claim on the policy Diego Sprekelsen, a contract area manager at the company has found the plan has helped him deal with an ongoing back complaint: My job involves lots of driving because I m managing people, my area covers from Gloucester to Pembrokeshire. I find the plan really helpful and use it a lot for my backache. I see the osteopath as much as I can. Simplyhealth introduced the plan to staff with a series of on site presentations. In 2005 Hall Mark Meat Hygiene had 30 employees, now it has nearer 70. All new staff members are sent information about the plan in their welcome packs. The company pays for private medical insurance combined with a higher level of cash plan for its senior employees. Monica has found it so valuable she now encourages others to use it more: I was with a colleague yesterday and she was complaining she had a backache so I said go to see a physiotherapist and Simplyhealth will help you. She hadn t thought about that but went and it worked really well. In the company we know we have the plan but if you ve never used it, you re not aware it is so easy to use. Hall Mark Meat Hygiene is now looking into upgrading the current cash plan to a higher level of cover. It is fully aware of how much its staff value it. Diego would even consider paying for it himself if he had to. He says: If my company didn t pay for the plan, I would take one out personally because it is useful. It is very easy to claim on the policy, the only thing was that I didn t always have time to take the cheque to the bank but now I see that the money can be put into my account automatically. Simplyhealth continues to work with Hall Mark Meat Hygiene to ensure the plan continues to meet its needs. More than 11,000 companies currently provide employee benefits through Simplyhealth. For more information about Simplyhealth corporate cash plans, please visit www.simplyhealth.co.uk DIEGO SPREKELSEN Contract area manager, Hall Mark Meat Hygiene A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 13

CASE STUDY The textbook way to boost staff morale Publicly funded organisations can find it difficult to provide attractive, yet cost effective benefits for their employees. City College Norwich found a happy medium when it implemented a cash plan for just 1 per employee per week City College Norwich has 950 employees ranging from managers to service staff and lecturers. Because it is publicly funded it found it difficult to improve its staff benefits package in monetary terms. However, it still wanted to ensure it attracts the best new employees and boost the morale of existing staff. After looking into the available options it introduced a range of employee benefits including flu jabs, healthy eating and wellbeing fairs. Alongside This extra benefit is the icing on the cake, providing us with an edge over our local competitors these additional benefits, it implemented the Simply Cash Plan to enable its employees to claim money towards everyday healthcare such as dental and 14 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

CASE STUDY optical bills. The college chose the most affordable option which costs 1 per employee per week. This met its overarching objective of improving employee benefits without incurring huge costs. The plan was rolled out to all employees through onsite presentations. Simplyhealth also made sure it had a presence on the college s intranet site and at its wellbeing fairs. Since introducing the Simply Cash Plan the college has recorded a reduction in sickness absence of 16% (between 1 August 2008 and 31 July 2009). Previously, employees were waiting up to six weeks to see a consultant, now they are able to refer themselves and claim back money towards the cost through Simplyhealth. Hilary Bright, head of HR, and the person responsible for implementing the Simply Cash Plan is very pleased with the impact it has had. She says: Having a Simply Cash Plan in place really boosts staff morale. As a publicly funded organisation, it can be difficult for us to improve incentives and bonuses, but this is a benefit that staff can use and feel the value from. A recent staff survey found that our people really appreciate being able to claim money back on optical and dental bills. CROSSHEAD The plan has also contributed significantly to the retention of employees. The college s staff turnover actually reduced during the recession, a welcome benefit for Hilary. Prior to introducing the plan, our staff turnover was above the national average, now it is less, she says. As an employer we offer competitive salaries and generous holiday entitlement but this extra benefit is the icing on the cake, providing us with an edge over our local competitors. CASH PLANS IN ACTION The client: Further education college with 950 employees The brief: Publicly-funded organisation with limited budget to spend on benefits The solution: Simply Cash Plan The cost: 1 per employee per week The result: 16% reduction in absence and a more motivated workforce Simplyhealth continues to monitor the usage of the plan to ensure that employer and employees alike are getting the most from it. It still works very closely with the college and provides all new employees with an induction presentation on the cash plan, so they are clear of the benefits available to them. As a publicly funded organisation, it can be difficult for us to improve incentives and bonuses, but this is a benefit that staff can use and feel the value from With such cost savings from the Simply Cash Plan, the college is now able to invest time and money in to developing more in house initiatives that help general wellbeing. Over the next couple of years it plans to expand what it offers employees even further. A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 15

SALES TECHNIQUES Sales techniques If you are a broker experienced in selling health insurance to employers, chances are you ll have all the techniques in place to sell cash plans to them as well. Here are some points you might like to consider in your sales approach Brokers who are experienced in selling private medical insurance (PMI) and other healthcare benefits should find the transition to selling cash plans quite straightforward. The skills required are similar and the company buying the cash plan may already be an existing client. Like all corporate sales, brokers need to tailor their approach according to who they are selling to. If they are speaking to the HR director, they should focus on the health and wellbeing benefits that cash plans include for staff and stress that cash plans can help the employer meet their duty of care responsibilities. Finance directors, on the other hand, will respond positively to the fact that cash plans are low cost in comparison to the amount of claimable benefit. Mark Bassett, corporate manager at The Private Health Partnership, says: This would see the employee perceiving the value of the scheme as being much higher than the actual cost. Unlike a PMI scheme where typically only 20% of members would actually claim, a cash plan offers everyday tangible benefits that all employees can use. FLEXIBILITY The sale should also be tailored according to the industry in which the company operates. A young, sport oriented workforce will appreciate the diagnostics and the therapies contained within a cash plan. It is also worth explaining to employers that cash plans can offer flexibility in benefit design and cost. Karen Gamble, director of health and wellbeing at Heath Lambert Consulting, says: We would explain how a cash plan can act as a tool for the company in containing sickness costs and that it is a benefit highly 16 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

SALES TECHNIQUES valued by staff. We would also discuss low cost and time administration and how there can be a mix of company paid and employee purchase. If the employer already has a PMI policy in place, cash plans can be sold as a way of bringing down PMI premiums. An excess can be applied to the PMI and the saving can be used to fund a cash plan which can cover minor claims. Cash plans can also be used to extend healthcare benefits to all employees, whereas PMI is often reserved for senior management. Some of the other key selling points of cash plans can be seen in the box below. The sale should also be tailored according to the industry in which the company operates VOLUNTARY SCHEMES Brokers can also use their sales skills to increase the take-up of cash plans in voluntary schemes. Although most cash plan providers will do the promotional activity needed to sign up staff, intermediary input can help to boost levels of engagement. Jack Briggs, intermediary sales and marketing director at Simplyhealth, says: When an intermediary is in a factory or office they can seek out those employees who wear glasses and explain that cash plans pay optical benefits. If it is a sunny day they can ask whether those employees use prescription glasses. If a member of staff is rubbing their shoulders they can tell them about the physiotherapy sessions available. Once an intermediary has found a hook to start the conversation, the wide range of benefits that cash plans offer employees and employers should make for a successful sale. WHAT ARE THE MAIN SELLING POINTS OF CASH PLANS? The low cost in comparison to other health related services such as PMI and income protection, and the high level of claimable benefits. A typical scheme costing 52 a year can offer over 1,000 worth of claimable benefit to the employee. High usage in relation to other health related schemes such as PMI. Tangible benefits such as dental and optical. The incorporation of some existing business costs such as eye tests and counselling support. Ease of underwriting with pre-existing medical conditions covered from day one. Ease of claiming with most providers reimbursing the claimant in two to three days. All cash plans include costs for diagnostic consultations and some for diagnostic tests. An accurate diagnosis can help an organisation manage their employees health within the workplace Cash for therapies reduce time off work while waiting for treatment on the NHS. It can bring several aspects of duty of care such as optical tests and employee assistance programmes under one umbrella allowing companies to monitor and manage this area more effectively. Source: Mark Bassett, The Private Health Partnership, and Karen Gamble, Heath Lambert Consulting A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 17

POTENTIAL CLIENTS Potential clients So, you ve got the background, you know how to sell cash plans but what about finding potential clients? Here are some suggestions to help you to grow your book One of the first challenges for any intermediary entering the cash plan market is to find clients. There are several ways to seek out clients, all of which are relatively straightforward and inexpensive. The most logical place to look for potential cash plan clients is the broker s existing private medical insurance (PMI) customer base. Most brokers clients will have a PMI policy in place but very few will have, or even be aware of, cash plans. Wayne Pontin, business development director at employee benefit consultants Jelf Group, says: Our main source of potential cash plan clients is our existing PMI clients. There normally sits behind PMI a significant, disenfranchised workforce which doesn t have health protection cover. REFERRALS Another way of finding new cash plan clients is via referrals. Tom McGuinness, business development and HR director at national intermediary Premier Choice Group, says he asks existing cash plan clients if they are happy with their product and the firm s service and, if so, whether they would be prepared to introduce the firm to some of the companies they deal with. We also ask if we can use their name when contacting other companies that are in their industry sector, as we know that if this existing client finds the cash plan to be a Brokers need to establish themselves as an expert and be a consultative salesman, otherwise someone else will good employee benefit, then so should other companies that work in the same industry, says McGuinness. Large broker firms can also use their other business divisions to help find potential clients. The general insurance and commercial finance specialists will usually have clients who would benefit from a cash plan and, indeed, other health insurance products. Some firms also have an introducer facility in place whereby a general insurance broker or IFA can refer cash plan business to them. Providers believe cash plans should form part of every discussion about a client s needs because of the value they can add. Cash plans enable employers to extend benefits to the entire workforce, they can save employers money when sold in conjunction with PMI, and they help keep staff healthy and at work. 18 HealthInsurance A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010

POTENTIAL CLIENTS Howard Hughes, head of intermediary marketing at Simplyhealth, says: Brokers need to establish themselves as an expert and be a consultative salesman, otherwise someone else will. They shouldn t just renew the same old PMI business instead they should carry out proper research of the client s needs. MARKETING Once an intermediary has done research to decide which clients would benefit from a cash plan, there are several ways to approach those clients. Pontin says he will often market the cash plan as an opportunity to introduce health protection as part of salary negotiations. In the past couple of years some companies have frozen wages and are looking at employee benefits as an affordable way of boosting the overall salary package. If the company has a large PMI provision it is also worth introducing the cash plan as a way of saving money. The employer can introduce an excess on their PMI premium and use the savings to fund a cash plan scheme which covers the excess. Some brokers will market a cash plan to existing clients by adding a cash plan quote into their renewal report, especially if cash plans are popular and successful in the client s industry. This can create interest or at least open up new dialogue with the employer. When an existing PMI client is due for renewal and the client has an excess on their PMI, we can build up a cash plan with benefits that fit around the PMI excess. If a client in these industries does not have an excess on their PMI, then we ask the PMI provider to do an alternative quote with, say, a 100 excess. This shows the saving on the PMI premium and that saving can be used to generate a cash plan with benefits built up around the potential excess. This shows the client that the cash plan can cover the excess, with some additional benefits such as optical and dental which were not covered under the PMI scheme, says McGuinness. Most clients want to provide greater benefits to their staff but they may be facing budget constraints. Cash plans, with their low cost and high value, are an ideal solution for many employers. TOP 5 TIPS ON...FINDING POTENTIAL CLIENTS n Contact your existing PMI client base and talk to them about cash plans n Ask those clients with cash plans if they are happy with their scheme and if so can they refer you to some companies they work with n Make sure you have introducer facilities in place so that other brokers and IFAs that do not have the capacity to handle cash plans can send business your way n Remind clients that they can introduce cash plans as part of their salary negotiations n Consider how cash plans can interact with existing benefits to make them even more attractive to employers A PRACTICAL GUIDE TO SELLING CASH PLANS / JULY 2010 HealthInsurance 19