Tesco to wade into health insurance market

Tesco Personal Finance, the financial services arm of the phenomenally successful supermarket group, are looking to shake up the Private Medical Insurance market by offering cheaper health insurance than the largest providers in the market, including companies such as BUPA and Standard Life Healthcare .

Tesco have proved that they wield power in the financial services industry, with deft moves into the car and home insurance markets. The company has an enormous distribution network, allowing them to provide more competitive deals to their customer base. It is thought Tesco health insurance could offer products up to 32 per cent cheaper.

Tesco are planning to keep the application short and snappy, using a technique called ‘moratorium underwriting.’ This means that the insurance company will not cover any condition for which the customer has sought advice, drugs or treatment for three years preceding the plan.

The head of savings and investments at Tesco Personal Finance, Jeremy Sutton, said: Our customer research suggests that perceived high prices, complicated products and complex medical questions have been major stumbling blocks to buying health insurance. Our approach will open up the market to people who want the choice that health insurance offers.

Julian Ross, of Standard Life, seemed unconcerned in one report: Tesco's products are at the more budget end of the market, but the average PMI customer tends to be over 50 and pretty discerning.