Two announcements made recently offer medical insurers food for thought. The first, if true, is the plan by hospitals to have another round of increases in service charges. The second one is the Safaricom-powered Linda Jamii product.
While most medical insurers are struggling to meet the required numbers to make viable business, the looming increase in charges creates a further obstacle to achieving profitability.
This is because although few in numbers, major hospitals collectively account for the biggest dent in the claims pie.
The majority have still not met the requisite numbers to have a viable product hence characterizing their inability to break through. Poor claims settlement history, operational inefficiencies and badly designed packages being the chief culprits.
Traditionally, top-tier hospitals call the shots as far as premium pricing is concerned, especially for corporate covers. Loyal corporate firms are slowly being steered to better packaged covers.
The credo it seems is “Pay your old premiums, but change your medical provider to a more affordable one”.
This is a good strategy as price escalations on premiums hurt a product’s uptake. However, pricing isn’t the only attractive strategy needed.
More insurers are catching up with an important marketing strategy; speedy claims settlement. Because service providers are asked by potential insurance clients, “Which is the best medical cover for me?” meeting claims on time is the best way to win providers over to market a cover.
Obviously, the insurer stands to gain in this marketing strategy. Billboards across the country with allegations of superiority in claims settlement is the new trend.
Nothing is said about premium cost or exclusions but this doesn’t seem to hurt their numbers, judging by new signings.
The second plan that will hit insurers hard is the ambitious 1,000,000 clients by year target set by the Linda Jamii consortium.
Since the savvy and willing clients’ pool is unlikely to grow by one million by next year, the logical conclusion in the short term is that their numbers will come from luring existing clients to change insurers.
Insurers have to look for ways in which to stem this. The new product’s advantage is the wide network of vendors through Safaricom which offers the all-important easy and widespread brand visibility.
That said the assumptions that it hits its Sh12 billion target and remains commercially viable despite having no exclusions will be a tight one.
As a general rule, consumption of outpatient schemes is at the patients’ whims. They will come to hospital whenever they feel like, sometimes five times in a week for which they will still be invoiced.
The bold “no exclusions” policy may come to haunt the insurer or leave a bitter product after-taste for the clients and service providers if the arithmetic doesn’t add up.
Still, if there is anything good about the telco’s partnered products, it is that they are usually well thought out.
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