Mintel’s research for this Report shows how the pandemic has had a huge impact on the nation’s health and wellbeing, with an astonishing number of people deterred from seeking the medical help they need. From the start of the outbreak in March to the end of July, a third of UK adults delayed contacting their GP about a new or existing health matter. Separately, more than a quarter put off seeking medical advice in-person, such as visiting A&E, due to concerns about COVID-19. The proportions were even higher among people with health insurance.

Given the extent of delayed and deferred treatment, this will inevitability affect the level of future claims and, in turn, profitability, over the short to medium term. The resultant recession will also have negative repercussions for the UK health insurance market.

Large-scale job losses, which are expected to follow the winding up of the government’s CJRS (Coronavirus Job Retention Scheme), will lead to a contraction in the corporate headcount in 2021, while a prolonged recovery will impact both consumer and business confidence. This will make winning new customers and corporate contracts even more challenging.

On the positive side, lengthy NHS waiting times caused by a backlog of cancelled and postponed operations and procedures will fuel demand for private healthcare solutions. Although the self-pay sector is likely to benefit the most from this, there will be ample opportunity for insurers to raise the profile of health cover products, at a time when health and wellbeing is centre stage. Furthermore, with the pandemic having accelerated the rollout and adoption of remote services, Mintel’s research reveals significant scope to bring virtual healthcare to the fore. This shift towards ‘telehealth’ will not only give customers added value and convenience but also potentially deliver cost savings for providers.

This Report was finalised as the government announced a second national lockdown in England to last between 5 November and 2 December 2020. While this will be disruptive for consumers, it should not significantly change the outlook for the health insurance market, given the shorter timeframe for the proposed restrictions and the efforts to keep normal health services running as much as possible during this period.

• The impact of COVID-19 on the health insurance market, as well as on the health and wellbeing of the adult population.

• The size of the health insurance market and a five-year forecast for new PMI business.

• Innovation and competitive strategies in the market.

• Penetration of PMI and health cash plans among UK consumers and, in regards to PMI, the types of cover held.

• Assessing interest in private healthcare and identifying the most attractive benefits of PMI among the non-insured.

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases the following month. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks.

The Health Protections Regulations 2020 came into effect on 15 June allowing the reopening of all non-essential stores in England as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4 July, with many beauty businesses following on 13 July.

From 24 July, it became mandatory to wear face coverings in shops and supermarkets. Rules on travel remain fluid: from 10 July, travellers from more than 50 “low risk” countries no longer had to self-isolate for 14 days, but on 28 July the removal of Spain from this list of low-risk countries dominated headlines in the UK. During the course of the next few weeks, further countries (including France) were removed from this list.

By September, COVID-19 cases and deaths were again on the rise, heightening concerns about a second wave in the UK (following in the footsteps of some other European countries, such as France and Spain). On 22 September, the Prime Minister announced further targeted measures in England, which included closing pubs and restaurants early, encouraging people once again to work from home and making face coverings mandatory in more situations. Restrictions were also tightened in Scotland, Wales and Northern Ireland, albeit with some variations (eg Scotland reintroduced a ban on visits between households as from 25 September). In England, the public were warned that these restrictions could last six months.

In mid-October, with COVID-related deaths and hospital admissions once again on a sharp upwards trajectory in many regions, the government introduced a new three-tier system of national rules. Areas classified as Tier 1 (medium risk) are subject to the rules already in force, ie gathering of more than six people in England is not permitted, unless it meets one of the exemptions, and pubs, bars and restaurants must close by 10pm. Areas in Tier 2 (high alert) are subject to additional rules including a ban on meeting socially indoors with people from other households (excluding those in support bubbles). Areas with the most rapidly rising transmission rates are placed in Tier 3 (very high alert). Tier 3 restrictions include a ban on meeting socially with anybody who is not part of your household, or support bubble, indoors. Pubs and bars must close unless they are serving substantial meals and people are advised not to travel into or out of Tier 3 areas, other than for work, education, youth services or because of caring responsibilities.

Restrictions are different in each of the four nations, with additional restrictions in parts of Scotland, Wales and Northern Ireland.

On 31 October the government announced new lockdown measures that are due to take effect from 5 November to 2 December. These measures will again require people to remain largely at home (except for work purposes), ban mixing between households and see the closure of leisure and hospitality venues and non-essential retail and services. However, unlike the previous lockdown, school and universities will remain open.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The forecast in this Report assumes the rollout of a vaccine during 2021.

This Report examines the UK market for health insurance. The main focus is on PMI (private medical insurance), with a secondary focus on health cash plans. Product definitions are as follows:

PMI is designed to cover the costs of private treatment for what are commonly known as acute medical/surgical conditions (ie curable, short-term illnesses or injuries). The main advantage of having this cover is that it ensures prompt access to treatment should the policyholder become ill or injured. Policies are either fully underwritten (requiring the policyholder to disclose their full medical history) or written on a moratorium basis (the policyholder needs to give more limited information and the policy excludes pre-existing conditions, whether or not diagnosed).

The market for PMI can be segmented into two discrete sectors: personal PMI (policies arranged by individuals) and corporate PMI (group schemes arranged by an employer for some or all employees).

Alongside traditional PMI, there are a number of product variants, such as policies that restrict cover to a specific condition/set of conditions (eg cancer or heart disease) or to certain specified treatments (eg physiotherapy or psychiatry). There are also policies available that are designed to cover diagnosis only or treatment and aftercare only.

A health cash plan provides cash benefits to cover everyday costs associated with primary care treatment (eg dental examinations, eye tests), hospital treatment (though not the treatment itself) and post-operative care. The majority of plans do not cover the full cost, but pay a fixed rate usually between 50% and 75%. Plans may also include protection cover, wellness services and telephone helplines. Unlike PMI, health cash plans work on the basis of ‘guaranteed acceptance’. This means that subscribers are not required to undergo a medical examination, and premiums are not based on claims history. Some plan providers adjust premiums according to different age bands, although most do not. Some also impose an upper age limit for joining or offer reduced benefits to those over a certain age (eg 64 or 74).

Other definitions used in this Report:

Telehealth is a broad term encompassing the entirety of remote and/or technology-driven healthcare. It covers all categories of solution that serve patients at a distance.

Virtual healthcare is a component of telehealth. It refers to the virtual visits that take place between patients and healthcare professionals (eg nurses, doctors, clinicians and consultants) via communications technology (eg by phone, text, video).