IDMF presentation

1
IDMF presentation

• Developing a successful new product targeting 55
  
• Standard Life Healthcare EspritHealth

2
Presentation will cover

• A case study of the development of Standard Life
  Healthcares EspritHealth, a private medical
  insurance product aimed at 55
• The research that informed the product
  development and communications
• The campaign, involving direct marketing, that
  has been successful at creating customer response

3
About Standard Life Healthcare

• One of the largest providers of private medical
  insurance (PMI) in the UK
• Protecting the health of over half a million
  people
• Providing business and individual health
  insurance plans
• Launch of tailored over 55's product in January
  2006

4
Private medical insurance (PMI)

• An estimated 6,398,000 persons covered by private
  medical insurance at the end of 2006, 10.6 of
  the population. Just over a million of these are
  covered on an individual basis (source Laing and
  Buisson 2007)
• 735,229 patients in England waiting for their
  first out-patient appointment following a GP
  referral on NHS (Sept 07-Dec07). (Source
  performance.doh.gov/uk/waitingtimes/)

5
About Steel Magnolia

• Market research specialist in 50 market
• Established in May 2003 in response to the
  growing importance of this target numerically and
  economically

6
Background to the research

• Standard Life Healthcare (SLH) were under
  represented in the older age groups
• Existing product not meeting needs
• Research undertaken to
• Understand motivations and barriers to buy
  private medical insurance among UK customers age
  55
• Understand their purchase process
• Understand the role of brand in their choice of
  provider
• Understand their product requirements and
  responses to a range of product ideas
• Groups and depths amongst existing and potential
  customers split by age 55-64 and 65, amongst
  both men and women

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Why 55?

• The market is growing numerically by 2020 50
  of the adult population will be 50
• Many transitioning from full time employment so
  leaving company schemes to individual policies
• Wealthier than the generation ahead of them so
  private medical insurance more affordable
• The older you get the more you are likely to need
  medical attention to repair aging parts!
• Medical insurance costs increase as you get older
  because of increased need

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Research indicated that needs of 55 are
different from younger people

• By this age most are not concerned to have cover
  for pregnancy, parent accommodation when staying
  with children, IVF
• Can be a sensitive time as they are aging and
  beginning to have more things wrong with them.
• It is a time of changes
• It is a time when they are most likely to have to
  claim on PMI. The inevitable increases in
  premiums can be very upsetting/potentially
  alienating and need to be managed with care
• They have a need for the providers to have
  integrity
• This is a more sensitive area than insuring your
  house or car, this is about human beings

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Product needs of 55 change as they get older

• At 55 most people would expect to have fully
  comprehensive private medical insurance. On
  retirement some feel that some re-evaluation of
  needs can take place
• As customers get older they experience premium
  increases start to re evaluate their needs.
  Some pay up others need to trim cover to contain
  costs
• The basic cover required is quick diagnosis with
  a consultant, associated diagnostic tests and
  treatment if required in a private hospital.
• Trade offs observed were
• Paying for some treatments themselves e.g.
  physio, alternative therapies
• Taking out an excess per year e.g. 100 or 250
• Limiting outpatient cover
• Wait plans i.e. for treatments where NHS waiting
  list is 6 weeks or more treated privately
  otherwise on NHS

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Motivations to buy PMI

• Existing PMI holders have mostly been users for
  many years and are reluctant to give it up.
• Their motivations to buy are often lost in the
  mists of time but affordability key
• What they value most about having the cover are
• Things they know they cant get via NHS i.e.
  speedy diagnosis and treatment
• Things they fear about the NHS e.g. mixed wards,
  no privacy, MRSA, poor nursing and horrible food
• There is also some snob value in being able to
  queue jump.
• For those working (esp self employed) being able
  to fit in with their lifestyle was of particular
  importance

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Barriers to taking out PMI

• Differences apparent amongst younger and older
  potential customers.
• Cost for some is a major issue especially amongst
  the younger group. Not well informed about the
  market place so find it difficult to compare
  quotes and often cannot get beyond this phase.
  They are often fit and healthy so have no
  immediate need to take out cover
• With the older group it is not so much they cant
  afford the insurance premiums it is more they
  choose to spend their money on other things e.g.
  holidays, going out and having a good time. They
  may also have (relatively) good experiences of
  the NHS

12
Opportunities with potential PMI customers

• Younger potential PMI customers fall into 3 broad
  types
• Active considerers
• Not for me now
• Antiinsurance
• Triggers to this group need to be tailored to
  these types
• Amongst older potential PMI customers triggers to
  consideration are
• Poor experience of NHS either themselves or close
  friends relatives
• Experience of waiting
• Looking after nearest and dearest if they are
  not being looked after quickly it can become
  intolerable for all concerned

13
Response to new product ideas

• Most interest was shown in product ideas that
  reduced the cost of premiums i.e. wait plan,
  excesses, No Claims Discount and shared
  responsibility
• Also having the option of having cover that is
  relevant to the individual e.g. Help at Home or
  recuperative care if no family to help following
  hospitalisation
• The additional benefits could be part of a menu
  system and added if the customer felt they really
  needed them

14
Brands have an important role to play in the
decision making process

• Most people appeared to be making the decisions
  about which brand to switch to. Whilst at one
  level it is just another insurance to organise it
  is not such a commodity as car and house
  insurance
• We observed 3 typologies in terms of preferred
  PMI brands
• Type 1 - Brand conscious deal only with brands
  they know of who they see as expert in the market
  place and reject unknowns
• Type 2 Needs focused - believe that the big
  specialist not concerned about individuals more
  concerned with corporate market. These people
  likely to consider NU healthcare, SLH, WPA,
  Exeter Friendly, Saga etc
• Type 3 Rate tarts who look at rates over and
  above brands

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Their requirements of communications

• Targeted and tailored communications sympathetic
  and tailored to their needs
• Colour and clarity
• As little small print as possible
• Use cost examples relevant to this age group
• Give them reassurance they are looking for
  peace of mind
• Be positive
• Consumer benefit is a primary need but SLH needs
  to continue to demonstrate their healthcare
  credentials. Both brand values and product
  information needs to be communicated
• Above all, communications need to demonstrate
  competitiveness to existing PMI holders and how
  SLH can keep their premiums under control

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New targeted product would help Standard Life
Healthcare establish more healthcare credentials

• From a brand perspective Standard Life is well
  known but as a standard insurance company. It
  misses out on any brand conscious type short
  list
• A proposition targeting the older community
  would certainly bring it to the attention of this
  market place. If positioned and priced correctly,
  is sympathetic and tailored to their needs it
  would give SLH a point of difference in the
  market place
• Would appeal to the needs focused and rate
  tarts

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How the research was used

• Product development
• Launch strategy
• Key messages
• Media used

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Product development

• Eliminated the aspects of cover they will no
  longer use e.g. maternity cover
• Developed a menu so that could include aspects of
  cover relevant to them eg. Help at Home,
  Recuperative Care
• Limited outpatient cover as consumers were happy
  to top this element up if it meant keeping
  premiums low
• Enhanced No Claims discount
• NHS 6 week wait option works alongside the NHS -
  appeals to the NHS loyalists

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Launch strategy

• To use media to generate response but at the same
  time to generate a brand/product awareness halo
• Longer copy adverts with price led messages
• Older imagery but recognising they don't want to
  be viewed as older
• Coupons a preferred response mechanic
• Reinforcement of key messages throughout the
  sales process and supporting collateral

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Key messages

• New plan designed exclusively for over 55s
• Reassurance of comprehensive cover
• Switching is easy and may cover pre-existing
  conditions
• Enhanced starter no-claims discount if you have
  not claimed in the last 5 years
• Award winning company

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DM piece
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Insert in DM piece
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Media used

• Targeted direct mail
• Press advertising in relevant publications e.g.
  The Times
• Inserts in relevant publications e.g. Country
  Life
• Ongoing targeting of online enquirers

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Was it successful?

• Increased response versus pre-launch levels
• Increased conversion versus pre-launch levels
  (5)
• Inserts proved successful for the first time in a
  few years
• Coupons also successful with the target group
• Provided a new story to re-contact previous
  enquirers

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The end

• Thank you
• For further information contact Janet Kiddle,
  Steel Magnolia
• janet_at_steelmagnolia.co.uk
• OR
• Chrissy Fice, Standard Life Healthcare
• chrissy_fice_at_standardlifehealthcare.com