Once the prospective purchaser has been put in touch with an insurer by an IFA, how many sales staff are going to refer the individual to a competitor? Probably none.
According to Health Insurance, which circulates among specialist advisers, the practice of insurance companies offering commissions to general IFAs is fast-growing.
It says: "Insurers who offer referral arrangements – which include AXA PPP healthcare, Bupa, PruHealth and WPA – argue that they can help grow the private health market."
The companies also defend the practice on the grounds that no information should be passed to the insurance company without the client's consent.
Among insurers who do not pay IFAs for referrals are Aviva and Exeter Family Friendly. They believe buyers should first seek "the advice of an independent, expert adviser before investing in a health policy."
One specialist adviser asks "how many brokers give truly independent advice anyway?" Martin Howell, managing director of broker MediSearch, asks: "How does a consumer know whether the broker to whom they are speaking has 50 Financial Ombudsman Service complaints against their name, or only deals with insurers who pay the highest commission?"
Specialist advisers do, in any case, get a sizeable commission from whatever insurance company they sell to the individual. This can be as much as 45 per cent of the first year's premium, dropping to 10 or 5 per cent on renewal. (The wide difference between "initial" and "renewal" is itself questionable. That encourages churning, in which the adviser forever moves the client between providers. One antidote is to ask the adviser what commission he or she is on.)
The squabble between different arms of the insurance industry may appear arcane, but if it helps consumers to be cagey about buying, it must be welcome.
‧Some National Health Service nurses have taken a beating over the past few weeks. Compassionless and poorly trained, their standards at Mid Staffordshire NHS Trust dipped so low that hundreds of patients suffered unnecessarily, leading to hundreds of avoidable deaths.
The Francis Report, out just before Easter, aimed to inject a long-overdue caring ethos in the profession; a bar on failed managers hopping on to a similar job at another hospital; statutory duty to report bad practice; a ban on gagging clauses; publishing survival rates for treatments – as currently done for NHS heart surgery.
Looking at that list, it's surprising how many are also needed in the private sector. There's no doubt that nursing standards are higher in independent hospitals, and they crucially avoided the MSRA plague in the Nineties. But anecdotal evidence suggests distinct room for improvement in some units.
And, of course, the private sector lags behind the NHS when it comes to publishing performance data for particular hospitals and those working in them. State medicine is more open than the consumerist private sector. Something wrong here.
‧Bupa has been under the cosh. Customer numbers in Britain for its health cover and well-being services, such as health checks, fell 6 per cent to a UK total of 2.7 million last year.
Profits nosedived, collapsing 22 per cent against 2011. The market leader blamed the "disappointing" results on a weak economy, rising health care costs and public-spending pressure.
But its competitors did better. Axa PPP, second-placed in the market, increased its policyholder numbers by 3 per cent last year. Third-placed Aviva UK Health pulled in nearly 9 per cent more.
But globally, it's a different tale. Bupa, which operates on a not-for-dividend basis, last year amassed 11.8 million customers worldwide, an increase of 9 per cent over 2011. Profits, too, were up, around 8 per cent. Among factors here were successful businesses in Australia and the company's expat insurance arm, Bupa International.
When it sold its UK chain of some 30 private hospitals in 2007, Bupa announced its intention to expand overseas. That bit of the plan, at least, seems to be on track. And as the UK health insurance market is in fast decline and the eurozone languishes, Bupa's long-term strategy of going global looks wise.
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