PruHealth Can It Stay Healthy?

Health insurance is a business and the only way a business can stay healthy is to make a profit. This means that a private medical insurance company must charge more in premiums from its clients than it pays out in medical expenses. In other words it relies on an accurate assessment of risk. This year Pru-health has seen an 11% increase in business. But with the worsening economic climate can this be sustained?

Pru-Health's success (it's only been around since 2003 and currently has 2.5% of the market) has been attributed to its Vitality Scheme where customers are rewarded with lower premiums for maintaining a healthy lifestyle. This means that customers are less likely to make claims but equally they have to pay less for their health insurance. If they do fall ill however, the medical cover is there.

According to Shaun Matisonn’s, PruHealth's Chief Executive, the current recession could be a challenge but also an opportunity for the company:

'In many ways [our proposition] is going to prove itself even more valuable in the current climate, The pressure on healthcare costs is going to increase. Levels of demand through things like stress and poor lifestyle choices is going to drift upwards and your ability to attract and retain healthy lives is going to become even more stretched.'

Encouraging people to stay healthy will mean that their premiums can be kept lower and overall it helps the health of the nation. When asked whether improving people's health would mean that less people would be ill and hospitals would have to increase their prices (which would then be passed on to the insurance company and ultimately the customers), Matisson said, 'we don’t have any belief that we’re going to eliminate disease,' and added that,

'Some think that the only way to make your numbers work as a health insurer is to cut costs at the hospital groups. But that doesn’t create a win-win. We can create a win-win by demonstrating that we’ve got a much more sustainable base, we’ve got healthier people, and when those people do have to go in to hospital we’ll be happy to buy the best care, and the hospital will be able to do what it is good at.'

What PruHealth seem to have done is made 'wellness' part of the medical insurance business model in the UK. That can only be good news for consumers.

Earlier in the month, Health Insurance News UK reported that PruHealth had attained much of its business via people interested in its free and heavily subsidised gym memberships and that it had had to rethink its business model as the huge influx of customers had created a drain on their immediate cash flow. It will be interesting to see how they can keep their Vitality customers happy and continue to grow their business in 2009.