Axa PPP has entered into an agreement to buy Bristol-based Simplyhealth’s PMI business, which industry experts have claimed is an indication of the need for providers to achieve critical mass.
On May 13, Axa PPP revealed that, subject to regulatory approval, it would be purchasing the PMI business of Simplyhealth for an undisclosed sum
The deal will see Simplyhealth’s Bristol office and its 390 PMI staff come across to Axa PPP, as well as some employees based in other parts of the UK. The PMI operations will continue to be based in Bristol.
Romana Abdin, chief executive of Simplyhealth, said: “This is a deal that makes sense for both sides. The sale of our PMI business will accelerate Simplyhealth’s strategy of investing in everyday healthcare, addressing the everyday conditions that stop people from making the most of life.”
Chris Horlick, distribution director for Axa PPP, said it was too early to say whether the deal would mean new products in the near future.
He said: “This is something we would have to consider,” adding: “There are many things we like about the Simplyhealth PMI business and it has developed a sizeable book despite the fact that it is a relatively small player.”
Mr Horlick also said advisers would continue to get strong service post-deal, adding: “We have a good track record of attracting advisers and supporting those who are new to healthcare.”
Stuart Scullion, chairman of the Association of Medical Insurance Intermediaries, said the deal was “indicative of the need for providers to have a critical mass to deliver economies of scale and aid their negotiations in the purchase of provider services”.
He said: “Most intermediaries will consider market consolidation and contraction to be a concern. However, there is a flip side.
“If the increased buying power of the remaining key players continues, it could lead to a reduction in premium rates. This will be good for the consumer and would undoubtedly help in growing the market. The crucial factor will be whether or not the reductions in the cost of purchasing treatment are passed through to buyers of PMI in the form of lower premiums.”
Roy McLoughlin, IFA for London-based Master Adviser, said: “We perceive that PMI will be a growth area particularly on the back of auto-enrolment. This industry does need to promote itself and its brand continually and while clients require as much choice as possible, the smaller players may struggle with this message. I think Axa PPP’s purchase of Simplyhealth is a positive move for a marketplace that needs effective PR and strong marketing messages.”