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Scenario One

Broker challenges the renewal price

I can't see how you can justify this increase. I am sure this must be a mistake!

The broker is representing Far and Away travel. We've suggested an increase in their plan cost from £100 to £117. The average claim is currently £70, so we are hitting a 70% CLR already.

We need to take into account the Insurance Premium Tax and your commission when calculating the CLR.

the broker

Your response...

Ah ok. Remind me what is the figure for Insurance Premium Tax?


Ok, my maths isn’t great, so if you can help me out. I get that I need to take the IPT and commission away from the £100 before I can calculate the CLR. So, what exactly does that bring it down to?

£80.37We subtract the 12% IPT by calculating 100/112 = £89.29We then deduct the commission of 10%, which is £8.92, leaving us with £80.37.

I understand now. Thanks for helping.

Scenario Two

Client challenges the renewal price

Look, you've asked me to increase the renewal cost from £80 per employee to £95. That's a pretty huge jump and doesn't seem right to me.

The client is from Simply Crinkly Pacakging. We've suggested an increase in their plan cost from £80 per employee, to £95. The average claim is currently just over £70.

the client

Your response...

That's good news and we do get very good feedback about theplans. I don't want to have to pull them, but at the same time I can't see why the increase is so much.

£71.43 (£80 x (100/112))

I can see that the average claim in your teams is £70. This shows that your teams really value the plan that you are offering them.

I appreciate what you are saying. At Simplyhealth we always work with pricing sustainability as a top priority, we will always be open and honest if an increase is necessary, in order to work with our clients long term and with the aim of building a long lasting relationship which we currently have together.

There are some other costs we need to factor in. Firstly, we have to take off the Insurance Premium Tax.

Ok, I see. So when you take the IPT away from the £80 what does that leave you with?

So, I can see that does mean you need to increase your prices to make some kind of profit, but £95 feels like it is too much.

We've got to consider inflation too. Healthcare prices continue to rise.

Ok, I hear what you are saying and I suppose that's reasonable. It is very popular amongst my staff. Thanks for taking the time to go through this with me today.

Scenario Three

Broker doesn't understand new businesspricing

It just doesn't seem fair, do you just make these prices up?

The broker has received new business quotes for two companies that are new to the market. Mama Mia Pizzas have been quoted higher than the Over Draft Banking Company.

The size of the business is a big factor in our pricing. We know that employees at smaller firms, like Mama Mia, tend to claim more than those at larger firms.

the broker

Your response...

So just for my reference what do you class as a firm in thelarger category?

Over 50 employees.

That makes sense to me.But wait, I have another firm similar in size to Mama Mia and there is still a difference here.

That might be down to how it is funded. A flex scheme is likely to have a higher claim percentage than one that is company-funded.

Ok, so new business pricing is down to the number ofemployees and type of funding. I guess that makes sense.I think we'll be bringing Mama Mia Pizzas on board.