Health Insurance Company intends to sell out its members

coachman12

CSHealthcare members have just been notified that its Board ( but not members) agreed last April to end its 100 year old existence as a Friendly Society dedicated to providing non-profit making health insurance aimed at workers in the public sector. Apparently they intend to hand over all its  members ( who actually are all owners of CSHealthcare) to BUPA ( whose Board has also agreed to detailed terms without telling its members).
I have family members who are CSH members and who are livid with the incompetence which has led to the disappearance of an old and once-proud Friendly Society dedicated , once upon a time, to making affordable health insurance available at reasonable prices to public employees who are not known for their massive salaries and who counted on CSH .
I am assured that successive CSH Boards over a decade or more have led to this sorry state, but the present Board must take the blame for the worst mistakes and bungling.
The details of what CSH and BUPA have cooked up between them will be put to the next CSH Annual General Meeting ( which will not actually physically take place next month as scheduled , due to Covid restrictions, so all CSH Members will be asked to vote online or by post next month). BUT the only vote available on the forms sent to them is " Join BUPA" or "not join BUPA".  There is no provision for members to discuss or vote on whether CSH should merge with another Friendly Society ( such as Exeter Insurance) , with a similar ethos ; whether the CSH "Reserve Fund" amounting to many millions of £s and a membersip of only about 20,000 members should be shared out to its members instead of being given to BUPA----as already agreed between the boards of both organisations !; whether there are any other suggestions by the owners of CSH ie its members. Like many CSH Board decisions in recent years it all smells of autocracy, chicanery and high-handedness. 
I have nothing against BUPA and I am not criticising their role in all this----except that they seem to be taking advantage of a struggling and declining CSH, due to poor management, and taking all CSH members' assets as part of a deal which will be only to BUPA's benefit.
I wonder if any MSE members had any experience of Friendly Societies, many of which are old and much-loved, dedicated to providing private healthcare to ordinary working people-------and which are now being gobbled up by the giants of the private health sector who are gaining more and more of a monopoly.
I have always been a believer in private healthcare insurance -----and I am covered myself by private policy. I strongly believe that people earning over ,say, £150,000 ( or whatever figure seems fair) should be made to use private healthcare policies in order to take pressure off the NHS's millions of routine procedures and operations etc ( NHS still covering all emergencies and very serious and complex operations for every person in UK as now).
Without going into, at any length, the rights and wrongs of private healthcare, has anyone got any thoughts please on the present general private sector status and, in particular, the sort of disgraceful treatment of owners of Friendly Society private healthcare organisations as set out above) ? TY.

dunstonh

To be fair, the friendly society and mutuals, in general, have increasingly had poor quality products or products not priced competitively apart from some exceptions in specialist markets.  Problem there is lack of distribution.

I wonder if any MSE members had any experience of Friendly Societies, many of which are old and much-loved, dedicated to providing private healthcare to ordinary working people-------and which are now being gobbled up by the giants of the private health sector who are gaining more and more of a monopoly.

It is the friendly societies that are generally approaching potential buyers.   They just cannot compete as much nowadays due to economies of scale and the increased cost of regulation and compliance coupled with a very small distribution channel.  Tehre are exceptions but I would not be surprised to see all friendly societies disappear in the medium term.

coachman12

dunstonh said:

To be fair, the friendly society and mutuals, in general, have increasingly had poor quality products or products not priced competitively apart from some exceptions in specialist markets.  Problem there is lack of distribution.

I wonder if any MSE members had any experience of Friendly Societies, many of which are old and much-loved, dedicated to providing private healthcare to ordinary working people-------and which are now being gobbled up by the giants of the private health sector who are gaining more and more of a monopoly.

It is the friendly societies that are generally approaching potential buyers.   They just cannot compete as much nowadays due to economies of scale and the increased cost of regulation and compliance coupled with a very small distribution channel.  Tehre are exceptions but I would not be surprised to see all friendly societies disappear in the medium term.

I think you are right, dunston, in your overall view that perhaps the days of many Friendly Societies are on the way out forever due mainly , as you say, to the economies of scale aspect and regulation and other costs. It is sad in many ways that 100 year old organisations that helped ordinary working people have a chance of obtaining what only the rich could do before are reaching their sell-by date,but the market marches on ruthlessly, I suppose, with the survival of the fittest ( though there are still some "fit" ones operating (no pun ) successfully ).
But I see no reason why "deals" are made by an elite few in smoke-filled backrooms ( or perhaps these days via Skype ) about members who OWN a Friendly Society and yet have no say into  which cattle wagon they are loaded and, perhaps more importantly, why they are not allowed to decide if they want to share out their statutory Reserve Fund amounting to £millions instead of meekly handing it over to the new company. That does seem a bit shady given that the owners have no say----even with one vote per member, the sole question is "BUPA or stay as you were?" ( and currently, as I understand it, premiums are very close as between CSH and BUPA for same services) ? On top of this there are highly acclaimed Friendly Societies such as Exeter which are moving on in good shape and are highly thought of by private consultants and hospitals.
Sorry, it is a subject which interests me , both morally as a vehicle for relieving NHS pressures and also because the more we move towards monopolies in the private healthcare sector, the worse it will be for consumers.

Sandtree

It is normal for the board to be empowered to make very significant decisions without reference to shareholders/members. The exec are voted in by the above and then generally speaking shareholders have to live by the decisions those people then make. Hands can be bound through regulation or corporate governance but outside of that unless they want to tap up the shareholders/members for more money to do something then they get on with doing the job they were elected to.

If you look at one of the big boys, Prudential spend £13bn to remove 1/4 of their non-profit annuities and moved its Hong Kong entity into another part of the business which all pre-empted the divide of the organisation into two seperate groups and shareholders there only got the vote on that final breakup question with a similar yes/no option. The rest, subject to regulatory approval, was within the Board's authority to approve.

History is a great thing but the world has moved on and not all companies (mutual/friendly etc or commercial) have kept pace. As has already been said, whilst originally noble intentions a number no longer offer quality products at good prices. How much of a premium are you willing to pay to continue that history?

coachman12

Sandtree said:

It is normal for the board to be empowered to make very significant decisions without reference to shareholders/members. The exec are voted in by the above and then generally speaking shareholders have to live by the decisions those people then make. Hands can be bound through regulation or corporate governance but outside of that unless they want to tap up the shareholders/members for more money to do something then they get on with doing the job they were elected to.

If you look at one of the big boys, Prudential spend £13bn to remove 1/4 of their non-profit annuities and moved its Hong Kong entity into another part of the business which all pre-empted the divide of the organisation into two seperate groups and shareholders there only got the vote on that final breakup question with a similar yes/no option. The rest, subject to regulatory approval, was within the Board's authority to approve.

History is a great thing but the world has moved on and not all companies (mutual/friendly etc or commercial) have kept pace. As has already been said, whilst originally noble intentions a number no longer offer quality products at good prices. How much of a premium are you willing to pay to continue that history?

I know in my heart that you are right, Sandtree, but it is still a great pity-----and bad news for consumers wanting private healthcare, a bad thing for the NHS  in losing more and more companies which take the weight off them in thousands of routine outpatients' treatments and minor/medium operations.
I wonder if, like me, you place any of then blame for the trend, which you so accurately describe, lying at the door of the medical fraternity and pharmaceutical companies who seem able to set whatever prices they see fit and are not regulated in a way which would help both NHS and private healthcare companies ?

dunstonh

I feel sad about the decline of the building society too.   And the change of the banks from their wooden panelled branches and regimented staff structure where every staff member had to do every job and was trained in detail to the nth degree. Meaning you would only speak to a staff member that actually knew the subject matter inside out.   And all the old insurers that have fallen by the wayside.   Many of whom were better than the company that bought them.    
All in the chase to the bottom of the market.

coachman12

dunstonh said:

I feel sad about the decline of the building society too.   And the change of the banks from their wooden panelled branches and regimented staff structure where every staff member had to do every job and was trained in detail to the nth degree. Meaning you would only speak to a staff member that actually knew the subject matter inside out.   And all the old insurers that have fallen by the wayside.   Many of whom were better than the company that bought them.    
All in the chase to the bottom of the market.

I think your analogy of building societies and the "old" insurance companies is "spot-on", dunston.
All that is new does not sparkle. Sometimes I look at what ruthless marketeers call "progress" and I feel in my bones that they are wrong. Your phrase "bottom of the market" is very apt.
Going back to my O/P, I have a relative who is the third generation of ordinary working class folk who chose to pay their savings into a very competitive Friendly Society so that they could afford private healthcare, which IMHO is as relevant now as it was in the days before the NHS. 
When a few very large companies eventually monopolise the sector, private healthcare will be available just for the rich----and once again, I believe it should be mandatory for the richest in our society to have their own private healthcare in order to stop the vital NHS from being overwhelmed by routine consultations and minor/medium operations and procedures.

Thrugelmir

As a member you have had the right to attend the AGM and question the board directly. The annual report points to a 10 year decline in membership as cost pressures have influenced people to allow their policies to lapse. As medical treatment becomes ever more expensive. A very different era to when the Society was first formed. Everything has to adapt to the times. 

coachman12

Thrugelmir said:

As a member you have had the right to attend the AGM and question the board directly. The annual report points to a 10 year decline in membership as cost pressures have influenced people to allow their policies to lapse. As medical treatment becomes ever more expensive. A very different era to when the Society was first formed. Everything has to adapt to the times. 

Thank you Thrugelmir as ever. In this case, due to Covid restrictions, there is no physical AGM in September, just a written or online Yes or No vote to take over by BUPA-----and with no public questions asked of the Board. I feel the whole thing to be shoddy and my elderly uncle concerned is most distressed.
If he ever needs private medical assistance or residential/nursing homes, I will take care of all that for him. But that is not the issue here---it is his depression and feeling of hopelessness in seeing a "done-deal" without consultation about a number of issues ( including loss of the Reserve Fund which he helped pay for), his inability  to question the Board or speak at a public meeting and the loss of a very old Friendly Society that his family has been associated with for 100 years.
Yes, as you say, things have changed since the forerunners of this old Friendly Society was founded, but it still seems unfair both in the general context as touched on by dunston and also by the shoddy autocratic manner in which this particular case has and is being handled without any consultation with the owners ( ie all the members).

Sandtree

I do always think there is too much rose tinted glasses sometimes when looking back... I started my insurance career in very early 2000s (so a spring chicken still compared to some) as a Third Party Motor Claim Technician and there were some insurers that I hated having to deal with and their traditional approaches... branch based companies where you had to phone the right branch else they couldn't/wouldn't help you, phone the wrong branch and 9 times out of 10 it would be "sorry, that policy isn't with this branch and Mr AAA is on the computer and so I cannot check which branch it is", insisting on these "B2B" calls that they are "Mr XXX" and not Bob or Sam etc, if you did finally track down Mr XXX in Bristol then he only works 9-4:30 and takes a 90 minute lunch each day. Finally you catch him when he is in the office, not on lunch, no one else is at the computer and... he says he'll get his assistant to find the file and will call back next week (which almost never happened)!!

Dealing with a modern insurer... call a central telephone number, speak to Jenny or Bob or whoever happens to answer the phone... they look up the claim on their computer and we can admit liability and agree that they'll waive their customers excess as they've already arranged repairs and we'll contact their PH to offer hire car.

Old_Lifer

I would endorse  dunstonh's comment regarding staff training.

When  I started  my career with a Life Office, all staff were recruited as school leavers and (with the exception of support staff such as typists and messengers)  were required to enrol as students with the Chartered Insurance Institue  (CII).  There was an expectation that all clerical staff would become ACII's  (Associate of the Chartered Insurance Institute)  by their early 20's    which resulted in a higher salary.    Obtaining the qualification required  passing  a total of of  nine  examinations  and usually took around  four years.  We had a few members of staff who had gone on to take further examinations and were  FCII's   (Fellow of the Chartered Insurance  Institute).    In addition to study at the weekends to complement the day job,   we were required to attend a local college  on two evenings a week,  on courses organised by the CII.    The tutors on these courses were FCII's  from a range of large Insurers.    All appeared  middle-aged,   and had  a wealth of experience and technical knowledge.

All the sales staff  were recruited from the  clerical staff.     On passing age 23,  a  member  of staff  could ask to  'go  outside' and join the sales force and become what was called  an 'Inspector' .    Training  lasted  nearly a year  and  consisted of  going around with an experienced  Inspector  (not always the same one) together with a couple of courses at Head Office.     Our sales force were not paid commision.    Every member of staff  had on appointment an automatic insurance agency   but in practice few  clerical staff sold anything except the policies they took out themselves.   On commencing sales training the agency was immediately restricted to 'own life and immediate family'.      Although the sales staff were not paid commission  they were given quarterly sales targets and were expected to achieve them     and were paid an annual bonus  which was dependent on reaching the target.   Not paying commission meant the Inspector was not under pressure to make the next sale  and could take a more considered view.     Our Inspectors  were required to explain a policy fully  and because of this it was rare to find a policy cancelled in the first year or two.     Treating the customer fairly was the  Industry norm at that time and  and if often resulted in  customer loyalty and repeat business.        All our business came from brokers and from personal recommendation.    We did not advertise  (not even leaflets).        In summary, if you were  seen by an Inspector you could expect him to have at least several years experience,   be an ACII or perhaps even an FCII,  not be chasing commission and could expect to be treated fairly.  However, this cosey traditional world of insurance changed when large numbers of people with  little knowledge of insurance  and no insurance qualifications began selling insurance products.

In the early  1970's the banks started selling insurance  products  and front -line bank staff found temselves tasked  with selling  insurance .    To counter this  the insurers started  recruiting large numbers of self-employed  appointed representatives   who were paid by commission  only   and like the front-line bank staff had little knowledge of insurance.   The self- employed insurance salesman  who came to call would have had just a brief introduction to the world of insurance   and may a month earlier have been selling  double  glazing or used cars.   The  self-employed  salesmen  often changed companies, chasing  ever higher commission  and often leaving behind a trail of cancellations which involved clawback of commission.  

It is little wonder that widespread mis-selling occured.   Faced with  a question that was not on the 'sales script'  and to which they did not know the answer it would be all too easy to say whatever sounded reasonable.    Who knows  what was said to secure a sale ?