Annual Report and Financial Statements
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Annual Report and Financial Statements For the Benenden Healthcare Society Limited for the year ending 31 December 2020 Contents Introduction Who’s Who 3 From our Chair 4 - 13 From our Chief Executive Officer 14 - 23 Strategic Report Strategic Report 24 - 43 Financial Review and Governance 2020 Financial Review 44 - 57 Risk Management Report 58 - 69 Attendance at meetings 70 - 71 Board Biographies 72 - 77 Board Timeline 78 - 79 The Board's Report 2020 80 - 89 Corporate Governance Report 90 - 105 Member Engagement Timeline 106 -107 Board Committees 108 -117 The Directors' Report on Remuneration 118 - 129 Auditor's Report 130 - 141 Financial Statements Financial Statements 142 - 185 Supporting Documents Appendix 186 2 Contents Who’s Who The Board External Auditors Bob Andrews – Chief Executive Officer Deloitte LLP Ian Blanchard – Board-nominated* Internal Auditors Mike Bury – Board-nominated* RSM UK Group LLP Helen Chamberlain – Chief Financial Officer Paula Clark – Board-nominated* Bankers Brian Eaton – Branch-nominated NatWest Group Barclays David Fletcher – Branch-nominated Louise Fowler – Board-nominated* Solicitors David Furniss – Board-nominated* Chairman Addleshaw Goddard LLP Angela Hays – Branch-nominated Brachers LLP Pinsent Masons LLP Ken Hesketh – Branch-nominated TLT LLP Adrian Humphreys – Board-nominated* Deryck Lewis – Branch-nominated Investment Managers Les Philpott – Branch-nominated Janus Henderson Ruffer LLP Chief Executive Officer Legal & General Group plc Bob Andrews Registered Office Society Secretary Holgate Park Drive, York, René Fraioli YO26 4GG Deputy Secretary Business Address Deryck Lewis Holgate Park Drive, York, YO26 4GG Company Secretary Richard Johnston ACG Telephone: 0800 414 8500 Website: www.benenden.co.uk Medical Adviser Friendly Society Number: 480F Mr Rowan Connell MD, FRCOG Financial Services Register Number: 205351 * Board-nominated directors are those directors considered by the Board to be ‘independent’ as defined by the Society’s own rulebook and as required by corporate governance best practice. The term is used throughout this Annual Report with that meaning. Who’s Who 3 From our Chair, David Furniss Rising to the challenge of COVID-19 In a year when the COVID-19 pandemic dominated our thoughts and our work, we adapted to support our members as fully as possible, despite the obvious restrictions. We also continued to plan for our future to put in place all we need to be a modern mutual. 4 From our Chair RGB Benenden portrait 21130_HR.jpg From our Chair 5 RGB GettyImages-1176848346 (1)_PURCHASED.jpg 6 From our Chair This will forever be known as the year of COVID-19. I hope it will also go down as a year when The Benenden Healthcare Society showed its flexibility to respond to one of the biggest challenges of its 116-year existence. No organisation has been left untouched by the COVID-19 pandemic. For us in the healthcare field the difficulties have been even closer to home. Our purpose is to improve the nation’s health, and never has that felt more essential than during 2020. We’ve responded in four main ways by: • Doing all we can to carry on serving our members, meeting their need for care and offering value for money in difficult circumstances • Working hard to keep our business running smoothly, despite two lockdowns • Keeping our members engaged by enhancing communication • Supporting the national effort to combat the pandemic through our Benenden Hospital Our hospital was given over to the NHS between March and July after the service purchased all available private sector hospital capacity to help it deal with the pandemic. We also continued to support the NHS until the end of 2020, and beyond. In the past few years, we’ve reported helping more and more of our members with their healthcare needs. In 2020, of course, it wasn’t possible to keep up this level of activity. For a considerable part of the year, treatments weren’t available through our hospital, or others in our network, as they devoted resources to supporting the NHS. Also, many of our members were reluctant to expose themselves to the increased risk of contracting COVID-19. From our Chair 7 Clearly, the disruption of COVID-19 has been Also through our partners we’ve been able considerable. In 2020, we helped you, our to support members who hold additional members, 82,944 times, this compares to Benenden Wellbeing products. This has 97,313 in 2019. We ended the year with far included cash plan customers having increased more ‘open’ cases than usual. time limits to submit claims, and travel insurance policyholders being able to alter Demand for services fell sharply early in their travel dates for up to 12 months or take the year, returned to 90% of pre-COVID-19 a pro-rata refund on premiums. Elsewhere our levels by August, but fell again later when home insurance has ensured cover is in place restrictions returned. Overall, the year for anyone whose home has also become an finished at 80% of 2019 levels. office and members who have booked Health Assessments have been able to reschedule Through the year, we’ve looked for ways appointments, take a refund or opt for a to carry on being there for members and brand new ‘at home’ health test kit. enhancing value for money. That’s included: • Continuing to authorise diagnosis and The disruption to normal services in 2020, treatment throughout the pandemic and the lower level of claims, means we end the year with an operating surplus* of £26.5m. • Extending the usual six-month But we do expect a sharp increase in demand authorisations for services until as things return to normal in 2021, and these 30 June 2022 funds will help us absorb this cost. • Usage of our phone based GP 24/7 and mental health services increased by 25% * Operating surplus is an alternative over 2019 levels performance measure used by the group. This is defined on page 47. • Offering specific COVID-19 support through GP 24/7 and a COVID-19 help and support hub on our website • Launching virtual wellbeing sessions and a remote physio service, which we’ll continue to offer • Suspending contribution payments for members in financial difficulties 8 From our Chair How we helped our members in 2020 as of 31 December 2020 We helped our members 82,944 times 30% 38% 19% 13% Diagnostic 24/7 advice Surgical Physiotherapy services and support procedures Diagnostic services used in 2020 30% 14% 6% 6% Physiotherapy Orthopaedics Dermatology Ear, nose and throat The above accounted for 56% of the diagnostic services provided in 2020. The remainder covered a variety of services including dermatology, gastroenterology and gynaecology. Surgical procedures carried out in 2020 5% 7% 8% 13% 19% 25% Dermatology Gynaecology Ear, nose General Ophthalmology Orthopaedic and throat surgery surgery The above accounted for 77% of all surgical procedures completed in 2020. From our Chair 9 Staying adaptable 47,781 new to change members As well as coping in the face of upheaval, we’ve also been able to keep our eyes on the future. One of the pandemic’s big lessons to us is that we must always be ready to cope with Attrition fell unexpected circumstances and shocks. Our from 6.4% resilience and plans for handling immediate, to 5.8% acute crises have been put to the test. We acknowledge too, that the pandemic isn’t over yet, and we must be prepared to adapt again as its trajectory changes. On the basis of what I’ve seen during 2020, I’m confident that we’re up to the task. Trustpilot ratings increased from 4.5* to 4.6* 82,944 members helped 140 businesses selected Benenden Health as their healthcare provider 10 From our Chair Keeping ourselves sustainable So, it’s not surprising that interest in private healthcare is growing. This makes people Of course, we must always be alive to the more likely to turn to us, but also, of course, longer-term challenges that face us. For this to our competitors. We must make sure we’re reason, we’ve continued to work on our plans well positioned with a compelling offer that’s to develop what we offer, so we can meet distinctive and affordable, and meets people’s the needs of even more people, and do it in biggest needs. a way that keeps us financially sound well into the future. Our ‘one product, one price’ offer of today is simple, and excellent value. These are two In 2019, we achieved something special powerful selling points that enable us to in reversing the steady decline in our attract new members and hold on to our membership numbers. The disruption we’ve existing ones. But we’ve been aware for seen in 2020 has paused that story, though some time that we need to vary our until March and the first national lockdown, offering to appeal to as many people as there were strong signs that it would continue. possible. Our potential audience ranges Before the second lockdown, our sales were from young professionals and couples to returning to pre-pandemic levels with member empty-nesters and active retired people. growth annualising at 10,000 in the final Reaching them all and developing long-term quarter, and more new memberships being relationships with them means tuning our opened than the same time last year. So while product to their varied needs. the upheaval of COVID-19 is frustrating for everyone, we’re also seeing signs that our The research and testing we’ve done in recent offer will find a receptive audience as we go years will bear fruit in 2021. We plan to launch into 2021.