Table of Contents
Executive Summary
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- Impact of COVID-19 on the health insurance market
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on the health insurance market, October 2020
- The market
- Market GEP set to contract by 7% over the 2020-21 as a result of the pandemic
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- Figure 2: Forecast chart of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
- A personal PMI policy costs double that of a group policy on a per subscriber basis
- The average PMI claim is over £2,000
- Cancer accounts for the largest share of claims incurred
- Health cash plan market is much smaller in value terms
- Companies and brands
- PMI is a heavily consolidated market
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- Figure 3: Estimated market shares of the largest PMI providers, based on gross written premium, 2019
- HCP providers operate on very tight margins
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- Figure 4: Estimated market shares of the largest HCP providers, based on gross written premium, 2019
- Pandemic caused major disruption to health services
- Claims activity fell sharply during the lockdown
- The consumer
- 12% of adults have PMI, while 5% have a health cash plan
- 62% pay for their health insurance themselves
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- Figure 5: Policy payee, July 2020
- Significant minority of PMI policyholders are unaware exactly what cover they have
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- Figure 6: Types of cover included in policy, July 2020
- 13% of existing PMI policyholders are not planning to renew cover
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- Figure 7: Attitudes and experiences of policyholders, July 2020
- Most people interested in health cover are not willing to pay more than £20 a month in premiums
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- Figure 8: Amount willing to pay for health insurance by non-policyholders, July 2020
- Difficulties accessing healthcare and postponed treatment
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- Figure 9: Experience of adverse effects of COVID-19 on personal health and wellbeing, July 2020
- COVID-19 has increased people’s willingness to use remote health services
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- Figure 10: Attitudes towards accessing healthcare in the future, July 2020
Issues and Insights
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- Telehealth is here to stay and has the potential to offer health insurers vital cost savings
- Longer NHS waiting times will boost interest in private healthcare solutions
- Adopt a holistic approach to health and wellbeing
The Market – Key Takeaways
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- The pandemic brings fresh challenges and opportunities
- Jobs recession means there will be some loss of corporate subscribers
- Claims activity will rise steeply once the worst of the crisis is over
- Huge NHS backlog will see more patients turning to the private sector
Market Size and Forecast
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- Recent shift towards virtual services will prevail, providing fresh opportunities post-crisis
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- Figure 11: Short-, medium- and long-term impact of COVID-19 on health insurance, October 2020
- PMI gross premiums forecast to decline by 7% over the 2020-21 period
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- Figure 12: Forecast chart of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
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- Figure 13: Value of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
- Market drivers and assumptions
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- Figure 14: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 6 October 2020)
- Learnings from the last recession
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- Figure 15: Value of PMI gross earned premiums, 2004-13
- Forecast methodology
Market Segmentation
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- Corporate PMI schemes account for 75% of all people covered
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- Figure 16: Number of PMI subscribers and people covered, by sector, 2015-19
- Growth in premium income driven by corporate sector
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- Figure 17: PMI gross earned premiums, by sector, 2015-19
- In 2019, average personal premium fell for the first time in years
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- Figure 18: Average PMI premium, by sector, 2010-19
Claims Experience
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- Cost of claims rose 4% in 2019…
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- Figure 19: PMI number of claimants, claims incurred and average claim value (ABI members only), 2015-19
- …while the average claim value for individuals was 59% higher than for corporate subscribers
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- Figure 20: PMI claims incurred and average claim value, by sector (ABI members only), 2015-19
- Largest share of claims relates to musculoskeletal conditions
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- Figure 21: Proportional distribution of claims incurred and number of claimants, by condition, 2018 and 2019
Other Health Cover Products and Solutions
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- Healthcare trusts offer employers an alternative to corporate PMI
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- Figure 22: Healthcare trusts – number of subscribers, people covered and gross earned premiums, 2015-19
- Health cash plans can be viewed as both complementary and a competitor product
- Health cash plan market operates on very low margins
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- Figure 23: Health cash plans – number of subscribers, gross earned premiums and claims incurred, 2017-19
- Cash plans compete with standalone vision and dental plans
Market Drivers
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- Job losses will reduce the corporate headcount
- Support measures introduced in place of the furlough scheme are not as generous
- Certain sectors and age groups more at risk than others
- Could a hefty COVID-19 spending bill prompt a further increase in IPT?
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- Figure 24: Changes to the standard rate of IPT, 2011 onwards
- NHS waiting times were already at record high before the crisis
- Millions face treatment delays and cancellations
- Further funding needed to tackle backlog of patients waiting treatment
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- Figure 25: NHS England – resource budget (excluding depreciation), in real terms, 2015/16-2020/21
- Cancer waiting times lengthen
- New technology helps to improve GP access
Companies and Brands – Key Takeaways
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- Health insurance is a heavily consolidated market…
- …which is continually subjected to rising cost pressures
- Telehealth paves the way forward
- Greater emphasis on mental health and wellbeing services
Market Share
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- Market leader Bupa grew customer numbers in 2019
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- Figure 26: Largest providers of PMI and health cash plans, by premium income, 2018 and 2019
- Top four control around 95% of the PMI market
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- Figure 27: Estimated market shares of the largest PMI providers, based on gross written premium, 2019
- CS Healthcare to merge with Bupa
- Simplyhealth reports growth in corporate business
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- Figure 28: Estimated market shares of the largest HCP providers, based on gross written premium, 2019
- Simplyhealth sells pet health business to concentrate on human health
Competitive Strategies and Innovation
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- Strategic developments
- Two providers restructure while a third plans a rebrand
- COVID-19 response
- Providers make pledges to refund customers…
- …and introduce support measures
- HCP providers similarly respond
- New innovation centres on new digital capability and telehealth
- Pandemic has put mental health under the spotlight
- New product launches
- Vitality introduces new preventative healthcare benefits for the SME market
- Aon offers ‘affordable’ health plan in partnership with Equipsme
Advertising and Marketing Activity
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- Vitality and Bupa top adspend list in 2019/20
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- Figure 29: Total above-the-line, online display and direct mail advertising expenditure on health insurance, 2015/16-2019/20
- Vitality’s ad to inspire people to stay safe, fit and healthy at home during lockdown
- Insurers shine a light on mental health issues
- Nielsen Ad Intel coverage
The Consumer – Key Takeaways
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- Product innovation is needed to develop more affordable PMI options
- Providers need to address dissatisfaction caused by disruption to cover…
- …and raise awareness of new mental health and wellbeing services
- Significant interest in cover but price remains the main barrier
- Delayed care will create demand for private healthcare
- Interest in virtual health services has been boosted by pandemic experience
Impact of COVID-19 on Consumer Behaviour
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- Public concern about catching coronavirus starts to rise again
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- Figure 30: Level of concern about risk of exposure to COVID-19, W1-W28
- What this means for the health of the nation
- Consumer spending on healthcare products likely to be maintained
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- Figure 31: Anticipated changes in expenditure on healthcare, household care, home and garden products and leisure and entertainment, W28 (17-25 September 2020)
- Many adults still feel “uncomfortable” with the idea of going to the gym
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- Figure 32: Level of comfort participating in various activities, W28 (17-25 September 2020)
- Wellbeing is more important than ever before
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- Figure 33: Key factors driving consumer behaviour around wellbeing, July 2020
Product Ownership
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- 12% of UK adults have private health insurance
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- Figure 34: Ownership of health and other insurance products, in order of significance, July 2020
- Household income is a major determinant of PMI ownership
- Few people have both PMI and a health cash plan
- 3% of UK adults have both PMI and dental insurance
- 72% of PMI policyholders are either paying part or all of the premium themselves
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- Figure 35: Policy payee, July 2020
- Joint and family policies are fairly prevalent
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- Figure 36: Policyholders covered, July 2020
Types of Health Cover Held
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- Only 35% of policyholders appear to have comprehensive cover
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- Figure 37: Types of cover included in policy, July 2020
- Personal subscribers are more engaged
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- Figure 38: Types of cover included in policy, by who pays for policy, July 2020
- Interest in cancer cover likely to increase post-pandemic
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- Figure 39: Types of cover included in policy, by ownership of top four cover types, July 2020
- Increased awareness of mental health cover could boost engagement
Policyholder Satisfaction and Renewal Intentions
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- 13% of PMI policyholders are not planning to renew cover
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- Figure 40: Attitudes and experiences of policyholders, July 2020
- One in three policyholders have experienced COVID-19 disruption to their cover
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- Figure 41: Attitudes and experiences of policyholders, by those planning to renew their policy and those who’ve experienced disruption to cover, July 2020
- High degree of correlation between having experienced disruption and receiving rewards
- Individual policyholders are more likely to have experienced disruptions…
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- Figure 42: Attitudes and experiences of policyholders, by who pays for policy, July 2020
- …and yet satisfaction levels are much lower among the latter
Assessing Interest and Affordability among Non-policyholders
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- Less than 1% of the non-insured would be willing to pay over £100 in monthly premiums
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- Figure 43: Amount willing to pay for health insurance by non-policyholders, July 2020
- Opportunity for health cash plans and limited health cover products
- Dental care is one of the most popular health insurance benefits
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- Figure 44: Most appealing benefits to non-policyholders, July 2020
- Scope to triple the size of the health cash plan market
Impact of COVID-19 on Consumer Health and Wellbeing
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- Pandemic has had a huge impact on the nation’s health
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- Figure 45: Experience of adverse effects of COVID-19 on personal health and wellbeing, July 2020
- One in three delayed contacting their GP about a health concern at the height of the pandemic
- PMI policyholders are more likely to feel their health had been compromised
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- Figure 46: Experience of adverse effects of COVID-19 on personal health and wellbeing, by those who have PMI and those with an HCP, July 2020
- 28% of PMI policyholders experienced treatment delays as a result of COVID
Accessing Healthcare in the Future
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- 32% of adults would consider private options because of increased NHS waiting times
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- Figure 47: Attitudes towards accessing healthcare in the future, July 2020
- Three in five adults are more willing to use virtual health services in future
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
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