Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Insights and Opportunities
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- Increasing PMI penetration for lower income groups
- Don’t forget the premium end of the market…
- …or small businesses for that matter
- What about rewarding loyalty?
- Splitting the focus
Market in Brief
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- The PMI market has picked up since 2006…
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- Figure 1: Gross earned premiums (GEPs) for PMI, by sector, 2002-07
- …with Bupa dominating, and smaller providers suffering
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- Figure 2: PMI provider rankings, by subscription income, 2005-07
- Worries about the NHS continue to drive the market…
- …but pricing pressure remains
- Two main competing products
- The corporate sector is heavily intermediated
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- Figure 3: Proportional distribution of PMI sales, by channel, 2005-07
- Almost a fifth of consumers have PMI
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- Figure 4: Ownership of PMI and other related healthcare/protection products, June 2008
Fast Forward Trends
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- Trend 1: Golden Bullet
- Enhancing medical treatment
- Clearer understanding required?
- Trend 2: Trading Up, Trading Down, Trading Over
- Weathering the storm
- Tapping a new segment
Internal Market Environment
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- Key points
- The role of the NHS…indirectly promoting PMI
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- Figure 5: Top ten reasons given by PMI holders for taking out cover, 2007
- Public spending on the NHS has increased significantly…
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- Figure 6: Total public spending on the NHS, 2002/03-2010/11
- …with waiting times having come down as a result
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- Figure 7: Inpatient and outpatient waiting times (England), 2005-08
- NHS health screening plans may also benefit the PMI industry…
- …as might the government’s plans for polyclinics
- The amount paid out on PMI claims has increased…
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- Figure 8: Claim amounts incurred and claims as a proportion of gross earned premiums (GEPs), 2002-07
- …whilst premiums have only modestly increased
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- Figure 9: Average PMI premiums, by sector, 2002-07
External Market Environment
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- Key points
- Greater personal wealth makes individual PMI more affordable…
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- Figure 10: Total personal disposable income (PDI) and consumer expenditure, 2003-12
- …but tighter economic conditions may force people to cut back
- Higher profits make corporate PMI more affordable
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- Figure 11: Gross operating surplus and balance of net primary incomes of private non-financial corporations, 2000-06
- PMI is a highly prized employee benefit…
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- Figure 12: Top ten company benefits received and most highly valued by employees, February 2008
- …and is the most common health benefit offered by employers
- Don’t forget the smaller businesses…there’s a lot out there
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- Figure 13: Number of private sector enterprises, employees and turnover – UK, start 2006
- Cancer incidence has increased…
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- Figure 14: Age-standardised cancer incidence and mortality rates, all cancers (excluding non-melanoma skin cancer), Great Britain, 1975-2005
- …whilst smoking prevalence has declined
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- Figure 15: Prevalence of cigarette smoking, by gender, 1974-2006
- Obesity is on the rise…
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- Figure 16: Number of obese men and women – England, 2003 and 2010
- …whilst alcohol consumption has fallen
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- Figure 17: Weekly alcohol consumption level: percentage of people exceeding specified amounts, by age and gender, 1988-2006
Competitive Context
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- Key points
- There are a range of healthcare funding options available
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- Figure 18: The main methods of obtaining healthcare treatment in the UK, 2007
- Healthcare trust schemes have grown in popularity…
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- Figure 19: Number of subscribers and people covered by healthcare trust schemes, 2002-07
- …although healthcare cash plans are more of a threat
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- Figure 20: Number of healthcare cash plan subscribers, people covered and contribution income earned, 2002-06
Strengths and Weaknesses in the Market
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- Strengths
- Lack of public faith in the NHS
- Innovation in the market attracting younger customers
- More affordable with modest increases in premiums
- Strong and established brands
- Weaknesses
- NHS improvements in waiting lists and treatments available
- Economic concerns curtail both consumer and business spending
- Lack of adviser interest in the personal sector
- Tax disincentives for both companies and individuals
Who’s Innovating?
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- Key points
- Enhancing employee benefits
- Capitalising on the health trend
- Partnerships for profit
- Other developments
- Making PMI more affordable
Trade Perspective
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- Key drivers of the market
- Growth areas for PMI
- Boosting sales in the individual market…
- …and the corporate market
- Promoting innovation in the marketplace
- The role of alternative healthcare products
- The impact of switching
- The role of intermediaries in the market
- Challenges facing the PMI market at present
Market Size and Forecast
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- Key points
- PMI is the most commonly held type of health insurance
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- Figure 21: Ownership of PMI and other related health/protection products, June 2008
- The PMI market has picked up since 2005
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- Figure 22: Number of subscribers and people covered by PMI, by sector, 2002-07
- Gross earned premiums have also steadily increased
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- Figure 23: Gross earned premiums (GEPs) for PMI, by sector, 2002-07
- Growth in virgin business remains crucial
- Market forecast
- The harmony of personal and public provision?
- Long-term growth is expected in the personal sector…
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- Figure 24: Forecast for the personal PMI market, 2003-13
- …with slightly lower growth anticipated in the corporate sector
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- Figure 25: Forecast for the corporate PMI market, 2003-13
- Average premiums are expected to decline in the personal sector
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- Figure 26: Average annual premiums for PMI, Index, 2003-13
- Factors used in the forecast
- Personal market
- Corporate market
Market Share
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- Key points
- Bupa retains its very comfortable number one spot…
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- Figure 27: PMI provider rankings, by subscription income, 2005-07
- …whilst smaller providers are quickly loosing ground
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- Figure 28: Illustration of PMI providers’ market shares, 2006 and 2007
- A number of third-party administrators
Companies and Products
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- Two key types of underwriting…
- …and the matter of price versus policy coverage
- Bupa
- AXA PPP healthcare
- Norwich Union Healthcare
- Standard Life Healthcare
- CIGNA HealthCare
- WPA
- Simplyhealth Group
- PruHealth
Brand Communication and Promotion
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- Key points
- PMI accounts for a small proportion of financial services adspend…
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- Figure 29: Top ten categories of financial services advertising expenditure (sorted on 2007 data), 2004-07
- …but it is the third-biggest category within general insurance
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- Figure 30: Top ten categories of general insurance advertising expenditure (sorted on 2007 data), 2004-07
- PruHealth has launched an aggressive advertising campaign
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- Figure 31: Top 20 PMI advertisres, by expenditure (sorted on 2007 data), 2004-07
- TV and direct mail are the most popular forms of PMI advertising
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- Figure 32: PMI advertising expenditure, by media type, 2004-07
Brand Elements
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- Brand Map
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- Figure 33: Attitudes towards and usage of PMI brands, July 2008
- Bupa
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 34: Attitudes towards the Bupa brand, July 2008
- AXA PPP healthcare
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 35: Attitudes towards the AXA PPP healthcare brand, July 2008
- HSA
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 36: Attitudes towards the HSA brand, July 2008
- Brand Qualities of PMI brands
- Bupa leads as the most authoritative, dependable and reassuring brand
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- Figure 37: Consumer usage of various PMI brands, July 2008
- Boots appears well placed for its launch into the market
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- Figure 38: Consideration of various PMI brands, July 2008
- Tesco PF has fairly high recent consumer usage
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- Figure 39: Consumer usage of various PMI brands, July 2008
- The new entrants are perceived to be gaining some ground
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- Figure 40: Momentum of various PMI brands, July 2008
- Bupa dominates on brand satisfaction
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- Figure 41: Brand satisfaction of various PMI brands, July 2008
- Commitment to HSA is high; one of the most loyal
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- Figure 42: Commitment to various PMI brands, July 2008
- Round up
Channels to Market
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- Key points
- Sales of corporate PMI are heavily intermediated
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- Figure 43: Proportional distribution of PMI sales, by channel, 2005-07
- The growing role of the internet…
- …and of course, the retailers
The Consumer: Product Ownership and Attitudes towards Healthcare
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- Key points
- Almost two in ten consumers are covered by PMI
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- Figure 44: Ownership of PMI and other related healthcare/protection products, June 2008
- Over half of PMI holders are covered by their employer
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- Figure 45: Ownership of PMI, by type of policy, June 2008
- PMI is the domain of the middle age groups…
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- Figure 46: Ownership of PMI and other related health/protection products, by gender, age, socio-economic group, lifestage, newspaper readership and gross annual household income, June 2008
- …and also of the more affluent
- Superbugs are a major cause of concern…
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- Figure 47: Attitudes towards public and private healthcare, June 2008
- …yet many are reluctant to pay for healthcare
- Intermediaries have a role to play
- Policy exclusions and medical disclosure are off-putting
- Older consumers are most concerned about superbugs
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- Figure 48: Agreement with selected statements regarding public and private healthcare, by gender, age, socio-economic group, marital status and gross annual household income, June 2008
- Wealthy consumers are more open to private healthcare…
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- Figure 49: Positive sentiment towards private healthcare, by socio-economic group, June 2008
- …with DEs and young adults being the most apathetic
- Married couples are also worth targeting
- Healthcare protection product owners have greater NHS concerns
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- Figure 50: Attitudes towards healthcare, by ownership of health-related protection products, June 2008
- Paid-for in taxes NHS treatment remains a barrier to some
The Consumer: Attitudes of Policyholders and Appealing Characteristics of PMI
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- Key points
- PMI holders seem to be fairly happy with their policy…
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- Figure 51: PMI holders’ views towards their policy, June 2008
- …with very few having had claims rejected in the past…
- …and switching provider also being relatively low
- Corporate PMI is a benefit enjoyed more by men
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- Figure 52: PMI holders’ views towards their policy, by gender, age, socio-economic group and lifestage, June 2008
- ABs are more likely to pay extra to have family members covered
- Older customers are more likely to have successfully made a claim
- ABs are happier with the service received from their provider…
- …but are also more prone to switching
- A clear explanation of what is covered is highly desirable…
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- Figure 53: Appealing characteristics of PMI, June 2008
- …as is enhanced policy coverage
- Are consumers becoming more practical?
- PMI holders tend to look for a well-known provider
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- Figure 54: Appealing characteristics of PMI, by ownership of health-related protection products, June 2008
- Coverage of pre-existing medical conditions is important…
- …but the real challenge is increasing consumers’ interest
- Women are more concerned with communication
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- Figure 55: Key reasons for choosing PMI, by gender, age, household income, tenure, ACORN category and age/socio-economic group, June 2008
- Younger adults are more price sensitive…
- …whilst Wealthy Achievers want cover for pre-existing conditions
- ABC1 18-34-year-olds are heavily influenced by word of mouth
- Larger households are less inclined to rule out PMI
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- Figure 56: Propensity to rule out PMI, by household size, June 2008
- Some final thoughts on appealing features of PMI
The Consumer: Further Analysis
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- Key points:
- Consumer mindset groups identified
- Potential PMI Targets
- And/or, respondents that have any of the following opinions about private healthcare:
- Happy Policyholders
- PMI Rejecters
- PMI Sceptics
- NHS Critics
- Happy Policyholders are likely to be high-income ABs
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- Figure 57: Profiles of various consumer mindset groups, by gender, age, socio-economic group, gross annual household income, household tenure, TV region, and age/socio-economic group, June 2008
- Young Potential PMI Targets look for wider coverage…
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- Figure 58: Key reasons for choosing PMI among potential PMI targets, by gender, age, socio-economic group, marital status and lifestage, June 2008
- …as do price-insensitive ABs…
- …whilst third agers want cover for pre-existing conditions
- How much do NHS concerns influence PMI uptake?
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- Figure 59: NHS concerns, by consumer mindset groups, June 2008
- PMI holders tend to be more concerned with the NHS
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- Figure 60: PMI/cash plan ownership, by levels of concern in the NHS, June 2008
- CHAID analysis
- What is CHAID analysis?
- CHAID analysis confirms ABs are the key target group for PMI
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- Figure 61: CHAID analysis on the PMI market, June 2008
Appendix – The Consumer: Product Ownership and Attitudes towards Healthcare
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- Figure 62: Ownership of PMI and other related healthcare/protection products, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008
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- Figure 63: Attitudes towards public and private healthcare, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008, (Table 1 of 2)
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- Figure 64: Attitudes towards public and private healthcare, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008, (Table 2 of 2)
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Appendix – The Consumer: Attitudes of Policyholders and Appealing Characteristics of PMI
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- Figure 65: PMI holders’ views towards their policy, by gender, age, socio-economic group, lifestage, presence of children, working status, household income and media usage, June 2008, (Table 1 of 2)
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- Figure 66: PMI holders’ views towards their policy, by gender, age, socio-economic group, lifestage, presence of children, working status, household income and media usage, June 2008, (Table 2 of 2)
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- Figure 67: Appealing characteristics of PMI, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008 (Table 1 of 2)
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- Figure 68: Appealing characteristics of PMI, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008 (Table 2 of 2)
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Appendix – The Consumer: Further Analysis
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- Figure 69: Profiles of various consumer mindset groups, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008
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- Figure 70: Appealing characteristics of PMI for Potential PMI Targets, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008, (Table 1 of 2)
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- Figure 71: Appealing characteristics of PMI for Potential PMI Targets, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education level, June 2008, (Table 2 of 2)
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