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Last Updated: Sunday, 3 October, 2004, 17:00 GMT 18:00 UK
Insurance boon for health conscious
By Julian Knight
BBC News Online consumer affairs reporter

Waist measurement
Health improvements should bring lower premiums

People who regularly work out at the gym are to be rewarded with lower private medical insurance premiums by a UK insurer.

From Monday, Prudential will offer its PruHealth policyholders money off premiums if they show signs of improving health.

Policyholders will be assessed on an annual basis for signs of improved health.

If, for example, they can show they have regularly attended the gym or have stopped smoking they can expect their premiums to fall.

However, one financial expert has questioned whether the scheme's premiums are too high.

Check up

Policyholders earn "Vitality Points" which count towards a discount on the following year's premium. The more points earned, the lower the premium.

The ways in which policyholders can earn points include:

  • Regular gym visits
  • Having a flu jab
  • Stopping smoking
  • Going for regular health screenings
  • Downloading healthy meal planners from the PruHealth website

PruHealth will offer policyholders discounted gym membership with health and fitness firms Holmes Place and Cannons.

I am worried that the costs of monitoring people's fitness will ultimately be passed onto consumers through higher premiums
Julian Crooks, Independent financial adviser

The insurer will be able to see how many times PruHealth policyholders who take up their discounted membership offer have visited the gym, and this will impact on annual premiums.

Policyholders will be grouped into four separate categories - bronze, silver, gold and platinum - according to their fitness level.

Those deemed to have reached the highest level of fitness - the platinum group - could see their premiums cut to zero after one year's membership, the insurer said.

Discounts after one year
Platinum fitness level 100%
Gold fitness level 75%
Silver fitness level 50%
Bronze fitness level 25%
Source: PruHealth

Even those with the lowest fitness score - the bronze grouping - will receive 25% off their second year of membership.

"Normally health insurance is simply about looking after you when you get sick but our scheme is about encouraging people to make a real difference to their well-being," Catherine McGrath PruHealth's chief executive, told BBC News Online.

Open to abuse?

However, some financial experts question the cost of the PruHealth scheme.

"This scheme is very innovative and a welcome development. But I am worried that the costs of monitoring people's fitness will ultimately be passed onto consumers through higher premiums," Julian Crooks, an independent financial adviser, told BBC News Online.

Mr Crooks said that the 25% discount given to all policyholders after one year suggested the scheme could be too expensive to start with.

A set of weights
Trips to the gym will be monitored

In addition, Mr Crooks said that he was concerned that the scheme could be abused.

"I question whether it can be proved 100% that people are making the strides that are being rewarded for."

"For example, who is to tell whether someone is dropping into their health club for coffee and to read a newspaper rather than to take exercise."

In response, Ms McGrath said that she believed that premiums would be "competitive."

As for people cheating the scheme, Ms McGrath said the annual fitness assessment would pick this up.

Behaviour change

The Prudential is the first UK private medical insurer to link premiums to health improvements.

Similar schemes already operate in the US and South Africa.

"In the US a similar scheme to ours has proved very popular indeed and has helped change behaviour, and as for people cheating the scheme there will be plenty of checks and balances in place," Ms McGrath said.

The UK scheme is a joint venture with South African health insurer Discovery.

Discovery chief executive Adrian Gore recently told BBC News Online that he hoped the scheme would attract one in 10 of the seven million Britons who already have private medical cover.

The scheme offers rebates to people who keep fit

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