Table of Contents
Introduction and Abbreviations
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- Report contents
- Methodology
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
Executive Summary
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- Private healthcare must respond to NHS reforms
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- Figure 1: Government NHS expenditure, 2000/01-2007/08
- Waiting times over 17 weeks have reduced
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- Figure 2: NHS waiting times, all specialities, GP written referrals (England), 2002/03-2003/04
- Total subscriptions continue to rise
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- Figure 3: Total PMI subscriptions and the proportion of people covered, 1999-2004
- Individual and corporate sales on level pegging
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- Figure 4: Gross earned premiums by sector – company versus individual, 1999-2004
- The value of PMI claims increases
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- Figure 5: PMI claims incurred, 2000-03
- Providers spent the most on direct mail advertising
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- Figure 6: Distribution of total advertising expenditure on private healthcare products, by main outlet type, 2003
- It seems that 16% of the population are covered by PMI
Market Factors
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- Will diagnostic and treatment centres lessen the appeal of PMI?
- Increasing life-expectancy can be good news for PMI
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- Figure 7: Expectation of life at birth, by selected ages, 1981-2001
- The NHS Improvement Plan
- NHS funding options
- NHS expenditure to rise 7.3% per annum
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- Figure 8: Government NHS expenditure, 1994/95-2007/08
- Staff and salaries account for 57% of NHS expenditure
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- Figure 9: Breakdown of government NHS expenditure, 2002/03
- Improving NHS facilities and careers
- Deliberate growth of expenditure is partly a result of under investment in the past
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- Figure 10: Total expenditure on health, as a percentage of GDP, 1970-2002
- A high proportion of US citizens are automatically covered by private insurance
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- Figure 11: Private insurance, as a percentage of total expenditure on health, 2002
- Worldwide the number of practising physicians ranges from one per 1,000 people to over four per 1,000 people
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- Figure 12: Practicing physicians per 1,000 population, 2002
- A new contract – the future of NHS consultancy
- NHS and private sector cost arrangements
- Companies can more easily afford PMI in 2004
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- Figure 13: Average annual net rates of return for private non-financial companies, 1993-2004
- The cost of illness to British business
- Delays in treatment could cause long-term damage to SMEs
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- Figure 14: Number of self-employed workers in the UK, 2000-09
- Waiting times of 17 weeks or more have lowered considerably
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- Figure 15: NHS waiting times, all specialities, GP written referrals (England), 2002/03-2003/04
- FSA compliance
- Self-pay offers an alternative strategy
Market Size
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- International PMI
- The UK PMI market has grown by 10% since 1999
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- Figure 16: Total PMI subscriptions and the number of people covered, 1999-2004
- Some providers have found it necessary to hold their corporate prices in 2004
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- Figure 17: PMI subscriptions, by company and individual purchase, 1994-2004
- Company PMI accounts for nearly three-quarters of total PMI subscriptions
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- Figure 18: Company to personal ratio (number of subscriptions), 1994-2004
- In 2004 the premium per subscriber is estimated to reach £799
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- Figure 19: PMI gross earned premiums and average premium per subscriber, 1999-2004
- Providers collect higher premiums from a declining number of subscribers
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- Figure 20: Gross earned premiums by sector – company versus individual, 1999-2004
- Total weekly household expenditure on medical insurance is £34 million
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- Figure 21: Average annual household expenditure, medical insurance and household insurances, by age, 2002/03
Claims Management
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- Those with a self-pay strategy may be surprised at how much procedures cost
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- Figure 22: Sample costs of surgical procedures and repayments, May 2004
- Claims as a percentage of premiums falls
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- Figure 23: PMI claims incurred versus gross premiums, 1999-2003
- In 2002 the annual change in gross claims surpassed the annual change in gross premiums
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- Figure 24: Percentage of annual change in gross premiums and claims incurred, 1999-2003
Competition Products
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- Cash plans are a low cost benefit for companies
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- Figure 25: Healthcare cash plan market, by number of subscribers, 1998-2004
- New CIC policy sales decline in 2003
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- Figure 26: New sales of individual critical illness policies, 1992-2003
- New individual income protection sales reached £83.1 million in 2003
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- Figure 27: New sales of individual income protection policies, by volume and value, 1998-2003
Product Development
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- Price is a major obstacle to sales
- Products will focus on areas where there are still NHS issues
- Menu protection
- New markets for PMI providers
- Psychiatry in primary care
Key Players
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- BUPA is the recognised market leader
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- Figure 28: Estimated market share of leading PMI providers, by premium income, 2003
- BUPA
- AXA PPP Healthcare
- Norwich Union Healthcare
- Royal & SunAlliance
- Standard Life Healthcare
Distribution
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- PMI Internet sales
- Last year direct sales accounted for 72% of overall distribution
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- Figure 29: Distribution of individual PMI policies by sales sector, 2003
- Are IFAs missing an international opportunity?
- NHS improvements may result in corporate PMI cancellations
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- Figure 30: Distribution of corporate PMI policies by sales sector, 2003
Advertising and Promotion
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- BUPA was the top advertiser in 2003
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- Figure 31: Top ten advertisers of private healthcare insurance, 2003
- Provider advertising budgets will increase 6-10% over the next year
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- Figure 32: Distribution of total advertising expenditure on private healthcare products, by main outlet type, 2003
- PMI marketing campaigns over the next year
Consumer Financial Activity
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- Cautious mood of consumers in relation to saving, investing and borrowing
- Financial activity affecting PMI
- Demand on the main financial services providers (MFSP)
- Borrowing, saving and debt repayment – diminished activity going forward
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- Figure 33: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2002-June 2004
- All groups will be less financially active
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- Figure 34: Expected financial activity by socio-demographic and income groups, June 2004 and average for the last ten quarters
- Investments and pension contributions look set to suffer
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- Figure 35: Leading financial activities planned in the next 6 months, September 2002-June 2004
- Mortgage market may now be turning
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- Figure 36: Intended mortgage and property purchase activity, September 2002-June 2004
- Halifax and NatWest were strong in the latest quarter
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- Figure 37: Leading main financial services providers: market shares, June 2003-June 2004
- Nationwide BS should see significant ISA business
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- Figure 38: Saving, investment and lending, market sizes by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), June 2004
- Some 65% of RBS customers intend to be financially active
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- Figure 39: Activity levels of main financial providers’ customer bases, June 2004
The Consumer
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- Around a tenth of the population is covered by corporate PMI
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- Figure 40: Ownership of PMI and other selected insurances, by gender, July 2004
- ABs most likely to own PMI through their employer
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- Figure 41: PMI ownership, by gender, age and socio-economic group, July 2004
- High income households more likely to be covered by PMI
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- Figure 42: PMI ownership, by marital status, lifestage, working status and general household income, July 2004
- Broadsheet readers most likely to be covered by individual PMI
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- Figure 43: PMI ownership, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, July 2004
- It appears that 51% of respondents who own health or protection insurance agree the NHS provides more than adequate cover
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- Figure 44: Agreement with two statements regarding private healthcare and the NHS, by gender, age and socio-economic group, July 2004
- Two thirds of health and protection product owners would prefer to pay for private healthcare treatment as they need it
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- Figure 45: Agreement with two statements regarding private healthcare and the NHS, by marital status, lifestage, working status and gross annual household income, July 2004
- Providers could increase PMI penetration through supermarkets
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- Figure 46: Agreement with two statements regarding private healthcare and the NHS, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, July 2004
Consumer Attitudes and Targeting Opportunities
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- A third of consumers agree medical insurance is too expensive
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- Figure 47: Agreement with statements regarding medical insurance, by gender, age and socio-economic group, July 2004
- A significant proportion of consumers are reassured by PMI
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- Figure 48: Agreement with statements regarding medical insurance, by marital status, lifestage, working status and gross annual household income, July 2004
- More than a quarter of respondents agreed medical insurance is a good way to beat waiting lists
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- Figure 49: Agreement with statements regarding medical insurance, by tenure, TV region and ACORN category, July 2004
- For some, medical insurance is an important part of a job package
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- Figure 50: Agreement with statements regarding medical insurance, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, July 2004
- Consumers aged 35-44 and C1s favour an annual health check
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- Figure 51: Main factors which encourage new or additional purchase of PMI, by gender, age and socio-economic group, July 2004
- If a key family carer falls ill some would like to receive help running the home
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- Figure 52: Main factors which encourage new or additional purchase of PMI, by marital status, lifestage, working status and gross annual household income, July 2004
- Discount healthy lifestyles
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- Figure 53: Main factors which encourage new or additional purchase of PMI, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, July 2004
- Those covered by PMI are likely to opt for mortgage protection insurance
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- Figure 54: Insurance ownership, July 2004
- Consumer typologies/clusters
- Penetration of typologies
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- Figure 55: Consumer typologies, by gender, age, socio-economic group and working status, July 2004
- Exclusive PMI offers may prove popular to account holders
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- Figure 56: Consumer typologies, by gross annual household income, lifestage and supermarket usage, July 2004
Industry Views
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- Market size
- PMI subscription rates
- Advertising expenditure
- Internet distribution
- Treatment centres
- Mortality rates
- General issues
The Future
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- Will self-pay kill the individual sector?
- What initiatives are likely to appeal to consumers?
- Corporate solutions
- Working with the NHS
- Providers must keep the balance of payments in the black
- Will advances of the future result in lower PMI premiums?
Forecast
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- Figure 57: Forecast of PMI subscriptions, by company and individual, 2004-09
- Figure 58: Forecast of gross earned premiums, by company and individual, 2004-09
- Factors incorporated
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