The HI Profile “A lot of intermediaries, I don’t think, understand that it [the cancer product] is out


there,” he says. “Our direct customers do offer it to their staff but we don’t really see a take up among the intermediaries.” Hall appreciates that the importance of cancer cover in private medical insurance (PMI)


may lead to some specialist intermediaries, especially, failing to register an interest in it. “I don’t think most intermediaries understand where it fits because we can group


rate it,” he says. “So if you’ve got an employer with 200 people who want to put it in, we can group rate that, but it’s not something that gets raised by the broking community very often.”


INTERMEDIARIES Hall has been a broker himself – “many” years ago he had a “small” broker business in Coventry – and the intermediary channel is one area which he is particularly passionate about. “Probably the biggest contribution I’ve made to the business in ten years is the


intermediary section of the business and that is a lot about ‘this what you see is what you get’,” he says. “I think the intermediaries, whether they are one man bands, whether they are new up and coming organisations like Team Reward, whether they are the big players like Aon, they want to know who you are and they want to know that if you shook hands on it you are going to stick to it.” Over a third of BHSF’s new business is introduced in some way by an intermediary


and Hall is insistent that there is little tension between the five sales channels he is responsible for. “It might be that we are supplying one element or two elements of their employee


benefits whereas the broker is supplying across the piece of which we are one or two parts,” he says. “And that’s just about honesty, that’s about saying to the broker that this is a competitive situation and it’s about giving them the exact same offer that we are making direct.” Hall says that he understands that “one or two” of our competitors do not operate


that way.


“Intermediaries want to know who you are and they want to know that if you shook hands on it you are going to stick to it”


“We are told by a couple of the nationals that they have been undercut by competitors of


ours where they’ve given the broker one offer and they’ve undercut it direct,” he says. “It’s not something we do. We’ve got an ethics statement that runs though the company.” Hall’s straight-talking approach with intermediaries has, he says, paid dividends


during the recession. “Throughout the recession, like every other business, their [intermediaries’] revenue


streams have come under pressure and we have had one or two frank discussion with them about their need to find new streams of revenue and to advise in new areas,” he says. “Some of the things we do – employee assistance programmes, online benefits, health cash plans – are all areas that they can move into and generate new revenue.” Like the intermediary channel, BHSF as a whole has had to cope with the recession,


although Hall believes the company’s not for profit status has helped it stand up to the downturn. “During the recession 10% of our corporate customers just ceased to exist so we


probably lost about 250, 280 companies that just went bankrupt,” he says. “But the other thing that came out of that for us was that increasingly people were catching onto this not for profit element that’s our makeup. We don’t need to make the same sort of margins that commercial players do.” Hall is clearly proud of BHSF’s heritage, although he concedes that it’s not for profit


status does have its own set of constraints. “On a strategic level being not for profit can hold you back,” he says. “You can only


shop with the money you’ve got in your pocket and you are always aware of the fact that it’s somebody else’s money, it’s the policyholders’ money you are investing. We can’t, for example, go to the markets and raise capital because we can’t issue shares so that can be strategically quite a challenge. That said, when we do make an investment in say something like online benefits or flex or whatever we can take a long view because we


August 2011 www.hi-mag.com


19


don’t have a shareholder at the end of the year baying for his return on his money. It’s swings and roundabouts really.”


THE CASH PLAN MARKET Staying on either is proving challenging for some competitors as their capital requirements come under scrutiny, Hall suggests. The new European capital adequacy arrangements around Solvency II will also hit the cash plan market and Hall is not convinced that all providers are prepared. “Solvency II takes a lot of our time, it takes a lot of management


resource, primarily from our finance team and our compliance team,” he says. “The rumour is that some of our competitors don’t think it’s going to apply to them. We are not sure that that’s right.”


“I’m still concerned about some providers’ combined ratios because somebody is paying the bill”


Hall remains concerned, too, that some providers in the market


are sailing too close to the wind when it comes to loss ratios. “I’m still concerned about some providers’ combined ratios


because somebody is paying the bill,” he says. Hall says, again without naming names, that there are “two


to three” providers in the cash plan market that have been burning through their reserves at too fast a rate over the past three to five years. “I would have an exceptionally tough job going into my operating


board or my group board and saying that I want to run a combined ratio of 110 for this marketing exercise or that marketing exercise. I’d have to have a pretty fireproof business plan with some very concrete projections because that’s policyholder money from the reserve that was invested 30, 40, 50 years ago.” Hall would like to see the cash plan sector as a whole go through


further consolidation, given the fact that the largest players in the industry, namely Simplyhealth and Westfield Health, have a very significant share of the market. According to Hall it would “make sense” for some of the so-called “second-tier” cash plan providers consolidate, although all have what Hall calls a “very proud” tradition that would make such consolidation unlikely. Nevertheless, BHSF itself has been acquisitive in the past,


taking on a cash plan scheme in Hull, as well as a book of business from Foresters Health. Diversification seems to be the name of the game for the organisation, though, as it eyes opportunities outside the cash plan market. A recent acquisition of a personal accident and group benefits broker called Network Benefits Group seems to suggest this might be the case. Hall isn’t so sure that there is much mileage in BHSF hoovering up small regional cash plan schemes. “There are a lot of cash plan schemes out there you could


acquire, whether or not they would be worth the management time invested in acquiring them, I don’t think that’s where we will go,” Halls says. “It’s not my decision it’s the group board’s decision, of which I’m only one, but I think [...] you will see us acquiring companies that bring us additional skill sets, that bring us a foothold in new markets or perhaps strengthen our position in markets.” Whatever direction BHSF takes, Hall looks certain to keep busy,


although it seems that’s the way he likes it. “It’s a hectic schedule,” he says. “If they hadn’t invented the


iphone they’d have to because it’s the only way I can keep up.” HI HealthInsurance


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