Table of Contents
Issues in the Market
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- Abbreviations
Insights and Opportunities
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- A need to appeal to younger consumers
- Waiting lists are still a valuable sales tool
- Has choice gone too far?
- Insurance for an active lifestyle
Market in Brief
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- An ageing, but increasingly affluent, population
- Growing integration between the private sector and the NHS
- A unique competitive environment
- Innovation and pricing
- Sales slowly increase, although the balance is shifting
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- Figure 1: Gross earned premiums, 1996-2006
- BUPA still dominates the market
- Direct sales the key to the individual market
- Less than one in five are covered by PMI
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- Figure 2: PMI ownership, June 2006
- Faith in the NHS is still strong
- Cost is the major problem
Fast Forward Trends
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- Trend 1: The Golden Bullet
- Trend 2: Happiness, Happiness
- Trend 3a: Empowerment/Choice management
- Trend 3b: The Choice Backlash
- Trend 4: Young and Uncertain
Broader Market Environment
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- Older consumers could drive up claims costs…
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- Figure 3: UK population trends, by age group, 2005-36
- …but they also offer scope for growth
- Impact on the NHS could increase sales
- Steady increase in PDI should help insurers
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- Figure 4: PDI and consumer expenditure at 2002 prices, 2002-10
- Companies well placed to fund premium rises
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- Figure 5: Quarterly net rate of return of private non-financial corporations, 1997-2006
- Employment on the up
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- Figure 6: Seasonally adjusted UK employment, employee and self-employed, 1996-2006
Internal Market Environment
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- Private sector rapidly increasing its role in the NHS…
- …offering positives for private healthcare providers…
- …but also negatives
- Making the financial case for PMI
- PMI viewed as an important way to reduce absence
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- Figure 7: Employers’ opinion of the benefits most likely to reduce sickness absence, 2006
- Reasons for offering PMI are changing
- Tax treatment a key issue…
- …especially for retirees
- Claims cost growth slows somewhat…
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- Figure 8: PMI claims costs, 1996-2006
- …but medical inflation is still a huge problem
- Cancer a particular issue, with costs set to soar…
- …and a shift from acute to chronic status
- Difficult decisions to be made by insurers
- ABI issues best practice guide, but the issue is far from resolved
- Genetics – the next flashpoint?
- Issues to be addressed across the insurance industry
- Family history is acceptable – why not genetics?
- Regulation impacts on the broker market
Competitive Context
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- Rivals come from both the private and the public sector
- The NHS
- The NHS remains the key competitor…
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- Figure 9: Department of Health spending on the NHS, 2000/01-2007/08
- …but not all are convinced that the money is well spent
- Key indicators suggest improved NHS performance
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- Figure 10: Inpatient waiting times (England), 2003-06
- Suspicions that the NHS is ‘massaging the figures’
- MRSA may also be having an impact
- Healthcare cash plans
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- Figure 11: HCP contributor numbers, persons covered, and earned income, 1999-2006
- Critical illness
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- Figure 12: Value sales of new critical illness policies, by type of policy, 2000-05
- Income protection
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- Figure 13: New sales of individual IP, by volume and value, 2000-05
Strengths and Weaknesses in the Market
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- Strengths
- Company sector on the increase
- Government willing to work with private sector
- The population is becoming healthier
- Budget policies are countering affordability issues
- Weaknesses
- Individual penetration remains subdued
- Older population leads to more claims
- Medical inflation continues to increase
- Competition products taking business from PMI
Who’s Innovating?
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- Moral hazard, adverse selection and PMI
- Incentivising customers to take care of their own health
- WPA’s approach to cutting claims costs
- Shared responsibility
- High-excess policies
- No-claim discounts hit the mainstream…
- …but not all are convinced
- How far can stripped-down policies go?
- And do these policies put the market at risk?
- Clear scope for innovation at a governmental level
- Lifetime Health Cover – creating a community rating…
- …by penalising late joiners
Trade Perspective
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- Experiences differ when it comes to distribution…
- …but broad agreement about the potential of the Internet
- Cost – or education?
- The risks of low-cost cover
- The impact of greater private/public interaction
- The future of the market
Market Size and Forecast
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- Earned premiums inching upwards
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- Figure 14: Gross earned premiums, 1996-2006
- Continued shift to corporate subscribers…
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- Figure 15: Balance of personal and corporate subscriber numbers, 1996-2006
- …although the market is more finely balanced when premiums are considered
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- Figure 16: Balance of personal and corporate gross earned premium income, 1996-2006
- Further shift towards corporate business expected
- Personal premiums increasing rapidly
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- Figure 17: Average PMI premium income by subscriber, personal and corporate policies, 1996-2006
- Growth to come from the SME sector?
- Corporate healthcare trusts – threat or opportunity?
- Opinion is split
- Market forecast
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- Figure 18: Forecast of the balance of personal and corporate subscriber numbers, 2001-11
- Figure 19: Trends and forecast of the balance of personal and corporate gross earned premium income, at current and constant 2006 prices, 2001-11
- Factors used in the forecast
- Longer-term prospects are good…
- …but PMI will be at the heart of a bitter debate
Market Share
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- BUPA leads the pack
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- Figure 20: PMI market share, by subscription income, 2004 and 2005
- Smaller companies look to take a greater slice of business…
- …with SMEs a possible growth sector for them
Companies and Products
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- BUPA
- AXA PPP Healthcare
- Standard Life Healthcare
- Norwich Union Healthcare
- WPA
Brand Communication and Promotion
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- Adspend slowly increasing…
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- Figure 21: PMI advertising expenditure, 2001/02-2005/06
- …although PruHealth is largely behind the increase
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- Figure 22: Advertising expenditure on private medical insurance, by provider, 2001/02-2005/06
- Direct mail and TV are the key advertising channels
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- Figure 23: Outlets used by PMI advertisers, 2005/06
- Advertisers play on concerns over the NHS
- Boosting the whole market
Channels to Market
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- Direct sales are the key channel in the individual market…
- …with the trend reversed for corporate sales
- A growing role for the Internet in the individual sector…
- …helping to build relationships as well as sell policies
- New initiatives look to boost intermediary sales
Consumer Financial Activity
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- Saving retains place at top of priorities
- Consumers will be subdued through the summer
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- Figure 24: Savings, investment, borrowing and debt repayment – consumers’ expected activity, March 2005-June 2006
- UK savings and spending climate
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- Figure 25: UK saving and spending climate – indexed, January 2001-June 2006
- 23-29s are looking to be active
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- Figure 26: Expected financial activity, by socio-demographic and income groups, June 2006 and average for the last 18 quarters
- Savings and life insurance come to the fore
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- Figure 27: Leading financial activities planned in the next six months, June 2005-June 2006
- First-time buyer activity will gradually recover
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- Figure 28: Intended mortgage and property purchase activity, June 2004-June 2006
The Consumer – Product Penetration
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- Employer-sponsored schemes still key
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- Figure 29: Ownership of protection products, June 2006
- PMI, unsurprisingly, is largely the preserve of the affluent
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- Figure 30: Ownership of PMI, by gender, age and socio-economic group, June 2006
- Shifting balance of PMI ownership
- Implications and opportunities
- Taking care of yourself?
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- Figure 31: Ownership of PMI, by marital status, lifestage, age of children and Mintel’s Special Groups, June 2006
- Implications and opportunities
- Employer cover commonplace among high earners
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- Figure 32: Ownership of PMI, by working status, household income, TV region and ACORN group, June 2006
- Implications and opportunities
- Scope for the supermarkets?
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- Figure 33: Ownership of PMI, by media and supermarket usage, June 2006
- Implications and opportunities
The Consumer – Attitudes and Opinions
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- Most still trust the NHS
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- Figure 34: Opinion on the adequacy of the NHS, June 2006
- Older respondents keep faith in public healthcare
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- Figure 35: Opinion on the adequacy of the NHS, by gender, age, socio-economic group and marital status, June 2006
- Implications and opportunities
- The generation gap
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- Figure 36: Opinion on the adequacy of the NHS, by lifestage, Mintel’s Special Groups, working status, household income and TV region, June 2006
- Implications and opportunities
- The broadsheets – leading debate on the NHS?
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- Figure 37: Opinion on the adequacy of the NHS, by ACORN group, media usage and supermarket usage, June 2006
- Implications and opportunities
- Insurance – or savings?
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- Figure 38: Willingness to pay for medical treatment as and when needed, June 2006
- Younger consumers prepared to self-insure?
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- Figure 39: Willingness to pay for medical treatment as and when needed, by gender, age, socio-economic group and marital status, June 2006
- Implications and opportunities
- High earners can afford to self-insure
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- Figure 40: Willingness to pay for medical treatment as and when needed, by lifestage, Mintel’s Special Groups, working status, gross household income and TV region, June 2006
- Implications and opportunities
- Are the Hard Pressed looking to cover themselves?
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- Figure 41: Willingness to pay for medical treatment as and when needed, by ACORN group, media usage and supermarket used, June 2006
- Implications and opportunities
- The key issue – would you consider buying PMI?
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- Figure 42: Willingness to consider using private medical insurance, June 2006
- Most ABs have considered buying PMI
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- Figure 43: Willingness to consider using private medical insurance, by gender, age, socio-economic group and marital status, June 2006
- Implications and opportunities
- Interest drops among third agers and the retired
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- Figure 44: Willingness to consider using private medical insurance, by lifestage, Mintel’s Special Groups, working status, gross household income, tenure and TV region, June 2006
- Implications and opportunities
- Internet users – clear scope for sales
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- Figure 45: Willingness to consider using private medical insurance, by ACORN group, media usage and supermarket used, June 2006
- Implications and opportunities
- PMI subscribers show significant differences
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- Figure 46: Attitudes towards the NHS, self-provision and purchasing PMI, by PMI ownership, June 2006
- Implications and opportunities
- Waiting lists are down – but do consumers believe the statistics?
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- Figure 47: Attitudes towards PMI, June 2006
- Apathy – or a lack of awareness?
- The advantages of private care
- Younger respondents more cynical
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- Figure 48: Attitudes towards PMI, by gender and age, June 2006
- Implications and opportunities
- Tailoring the package to suit the market
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- Figure 49: Attitudes towards PMI, by socio-economic group and marital status, June 2006
- Implications and opportunities
- Further evidence of a generation gap
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- Figure 50: Attitudes towards PMI, by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- High earners expect employers to offer PMI
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- Figure 51: Attitudes towards PMI, by household income, June 2006
- Implications and opportunities
- Faith in the private sector strongest in London
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- Figure 52: Attitudes towards PMI, by TV region, June 2006
- Implications and opportunities
- Internet users put their faith in private treatment
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- Figure 53: Attitudes towards PMI, by media usage, June 2006
- Implications and opportunities
- Avid TV viewers unlikely to have considered PMI
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- Figure 54: Attitudes towards PMI, by commercial TV viewing and supermarket usage, June 2006
- Implications and opportunities
- PMI owners sing the praises of the product
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- Figure 55: Attitudes towards PMI, by ownership, June 2006
- Implications and recommendations
- PMI typologies
- Seeking Flexibility (14% of respondents)
- Cost Concerned (24% of respondents)
- Quality Seekers (17% of respondents)
- Heedless (46% of respondents)
- Those aged 25-34 and the more affluent are Quality Seekers
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- Figure 56: PMI typologies, by gender, age, socio-economic group and lifestage, June 2006
The Consumer – Increasing Take-Up
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- Offering an MOT for the body could reap rewards
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- Figure 57: Factors that might convince consumers to purchase PMI, June 2006
- No-claims bonus – the way forward?
- Discounts for healthy living – significant, but limited, appeal?
- Travel cover key for younger consumers
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- Figure 58: Factors that might convince consumers to purchase PMI, by gender and age, June 2006
- Implications and opportunities
- Apathy is the overriding issue among the less affluent
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- Figure 59: Factors that might convince consumers to purchase PMI, by socio-economic group and marital status, June 2006
- Implications and opportunities
- Even well-off families have to watch the pennies
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- Figure 60: Factors that might convince consumers to purchase PMI, by lifestage and Mintel’s Special Groups, June 2006
- Implications and opportunities
- Making sure the high earners can keep on earning
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- Figure 61: Factors that might convince consumers to purchase PMI, by household income, June 2006
- Implications and opportunities
- Engaging interest north of the border
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- Figure 62: Factors that might convince consumers to purchase PMI, by television region, June 2006
- Implications and opportunities
- No-claims bonus to appeal to mid-market tabloid readers?
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- Figure 63: Factors that might convince consumers to purchase PMI, by media usage, June 2006
- Implications and opportunities
- Stuck in front of the television
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- Figure 64: Factors that might convince consumers to purchase PMI, by commercial TV viewing and supermarket usage, June 2006
- Implications and opportunities
- Confusion among corporate subscribers?
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- Figure 65: Factors that might convince consumers to purchase PMI, by ownership, June 2006
- Implications and opportunities
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