Bupa to remedy declining customer base with heartbeat strategy

Private Medical Insurance (PMI) has become more expensive and restrictive in recent years, as an increasing number of pre-existing conditions are excluded from cover. So, the number of people with PMI is decreasing, which is bad news for insurance companies.

Private Medical Insurance (PMI) has become more expensive and restrictive in recent years, as an increasing number of pre-existing conditions are excluded from cover. So, the number of people with PMI is decreasing, which is bad news for insurance companies.

A survey from market researcher Laing & Buisson reveals that 6.3 per cent of the population has private health insurance, compared with 10.8 per cent last year, showing that, despite the fact that many people are unhappy with the state of the NHS, they are not prepared to pay for PMI.

Over the last two years, Bupa, Britain's leading PMI provider, has upped its premiums by 14 per cent, while PPP Healthcare, the second largest medical insurer, hiked its cover by nearly 12 per cent last year.

Medical insurers face major problems in the current climate. As well as demand for cover declining, the average cost of claims is increasing. This disparity is leading to huge losses for PMI providers - last year Bupa lost £20m.

In a bid to reduce losses and attract new custom, Bupa has recently launched a new product, Bupa Heartbeat, a personal health plan in which premiums are calculated on an individual basis, rather than on an average person of a certain age.

There's a core product that includes in- and out-patient treatment: you can add on extra cover, so you end up with bespoke insurance built around your individual circumstances.

"We're trying to meet the needs of the customer at a price they can afford by treating them as an individual rather than the average," says a spokeswoman for Bupa.

One bugbear for people considering private healthcare is that many policies exclude pre-existing conditions. If you have a pre-existing illness, the chances are you will need treatment for it in the future. If your insurer won't pay, what is the point of buying cover?

Bupa says that with Heartbeat some 90 per cent of people who have pre-existing conditions under other policies would be treated. "We're trying to get a dialogue going with the customer," says the Bupa spokeswoman. "Just because they've suffered from a bad back or gynaecological problem, doesn't mean they won't get cover. An existing problem may cost more. But it may not."

* Contacts: Bupa, 0800 600500; PPP Healthcare, 0800 335555.