Table of Contents
Introduction
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- Product definitions and report coverage
- Types of health cover
- Abbreviations
Executive Summary
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- The market
- Standard model predicts slow premium growth
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- Figure 1: Forecast of total new PMI premiums, at current prices – fan chart, 2008-18
- Size of the subscriber base
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- Figure 2: Number of PMI subscribers and people covered, by sector, 2008-13
- Claims costs and market profitability
- Market factors
- Challenging economic backdrop
- NHS under financial pressure
- Intervention by the Competition Commission
- Alternative solutions
- Company, brands and innovation
- Two brands dominate
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- Figure 3: Top five providers’ market shares, based on subscription income, 2012
- Product innovation
- Brand reinforcement
- Distribution trends
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- Figure 4: Share of PMI sales, by distribution channel, 2009-12
- The consumer
- Penetration of PMI
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- Figure 5: Ownership of health cover and protection products, October 2013
- Customer views and claims experience
- Intentions to switch, cancel or downgrade cover
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- Figure 6: Intentions relating to downgrading/cancelling cover and switching providers, October 2013
- Barriers to take-up
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- Figure 7: Reasons for not having private health insurance (top eight), October 2013
- Difficulties and delays accessing NHS treatment
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- Figure 8: Experience of difficulties or delays in accessing NHS care (top eight), October 2013
- Concerns over the NHS’s future
- Potential market expansion
- What we think
Issues in the Market
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- What proportion of UK adults have private health cover?
- Why is demand falling?
- Is policy switching set to increase?
- How can providers stop the decline in penetration?
- How can providers persuade more SMEs to offer cover to their staff?
Trend Applications
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- Trend: Let’s Make a Deal
- Trend: Moral Brands
- Futures: Generation Next
Market Drivers
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- Key points
- Rising cost pressures prompt some PMI subscribers to consider downgrading their level of cover
- Services sector sees increase in profitability…
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- Figure 9: Net rate of return of private non-financial corporations, 2003 Q1-2013 Q2
- …but new pension duties could lead to companies cutting back on existing perks
- Similarly, an ageing workforce has extra cost implications
- A high level of interest in low-cost corporate PMI
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- Figure 10: Proportion of employers offering selected benefits as core, March 2013
- Rising medical costs underpin strong PMI premium inflation
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- Figure 11: Average PMI premium, by sector, 2003-12
- Competition Commission’s investigation into private healthcare services
- People are living longer, but not necessarily in good health
- Health and lifestyle trends
- Slowdown in NHS spending puts greater financial pressure on NHS hospitals
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- Figure 12: NHS net expenditure, 2008/09-2015/16
- … potentially leading to longer waiting lists…
- … and more cancelled operations
Rival Products and Alternative Solutions
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- Key points
- Healthcare funding options
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- Figure 13: The main methods of obtaining healthcare treatment in the UK, 2013
- More than 1.2 million people are covered by a self-insured scheme
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- Figure 14: Number of subscribers and people covered by PMI and healthcare trust schemes, 2008-12
- Concerns about the further of the NHS should fuel interest in health cover products
- Penetration of health cover and protection products
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- Figure 15: Penetration of health cover products, October 2013
- Health cash plan market experiences sharp contraction in the number of people covered
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- Figure 16: Number of health cash plan subscribers, people covered and contribution income earned, 2008-12
Market SWOT Analysis
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- Figure 17: The PMI market– SWOT analysis, 2013
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Who’s Innovating?
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- Key points
- Providers are continually exploring ways of making their products more attractive and affordable
- PruHealth planning to make key improvements to its personal PMI proposition
- Simplyhealth offers customers greater flexibility with new propositions for individuals and SMEs
- Aviva offers corporate clients new open referral plan…
- …and revamps individual PMI offering
- AXA PPP launches healthcare master trust
- Bupa unveils new breast cancer network and improves its direct-to-consumer product
- PMI comparison site launched
- Growth of the international cover market
Market Size and Forecast
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- Key points
- Demand for PMI continues to recede…
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- Figure 18: Number of PMI subscribers, people covered and gross earned premiums, 2008-12
- …while premiums move up, driven by rising cost pressures
- The market should continue to grow, albeit at a very steady rate
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- Figure 19: Forecast of total PMI gross earned premiums, at current prices – fan chart, 2008-18
- Figure 20: Forecast of PMI gross earned premiums, at current and constant prices, 2008-18
- Premium rate growth
- Forecast methodology
- Fan chart explanation
Market Segmentation
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- Key points
- Personal business represents an important revenue stream
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- Figure 21: Proportional distribution of PMI subscribers, people covered and gross earned premiums, by sector, 2013
- The decline in subscribers has occurred across both sectors
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- Figure 22: Number of PMI subscribers and people covered, by sector, 2008-13
- The corporate sector is driving premium growth
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- Figure 23: PMI gross earned premiums, by sector, 2008-13
Claims Paid and Market Profitability
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- Key points
- Premium income keeps pace with the cost of claims incurred
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- Figure 24: PMI gross earned premiums and claim amounts incurred, 2002-12
- Gross margins have improved over the past two years…
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- Figure 25: Claim amounts incurred as a proportion of gross earned premium, 2008-12
- … but maintaining profits comes at a price
- Overall sector profit
Market Share
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- Key points
- A mature market dominated by a handful of established brands
- Bupa and AXA PPP continue to dominate the market
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- Figure 26: Top five providers’ market shares, based on subscription income, 2012
- Third-placed Aviva put in a strong performance in 2012
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- Figure 27: PMI subscription income, 2008-12
- Third-party administrators
Companies and Products
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- Bupa
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 28: Key financial data for Bupa, 2011-12
- Recent activity
- AXA PPP healthcare
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 29: Key financial data for AXA PPP healthcare, 2011-12
- Recent activity
- Aviva
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 30: Key financial data for Aviva plc, 2011-12
- Recent activity
- PruHealth
- PMI market position
- PMI subscription income
- Description
- Product Range
- Financial performance
- Recent activity
- Simplyhealth
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 31: Key financial data for Simplyhealth Group, 2011-12
- Recent activity
- WPA
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
- Recent activity
- Other significant brands
Brand Communication and Promotion
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- Key points
- Sharp drop in PMI adspend in the year to August 2013
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- Figure 32: Advertising expenditure on private medical insurance, 2009-13
- TV and direct mail account for the largest proportion of spend
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- Figure 33: Proportional distribution of health insurance adspend, by media type, 2009-13
- Simplyhealth becomes the top PMI advertiser in 2013
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- Figure 34: Top ten advertisers of health insurance products, 2009-13
- Sponsorship activity
- A note on adspend
Channels to Market
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- Key points
- Intermediaries generate the majority of corporate PMI sales…
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- Figure 35: Share of PMI sales, by distribution channel, 2009-12
- … while most individual sales are arranged direct
Ownership of Health Cover & Protection Products
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- Key points
- Survey background
- Around one in six UK adults have private medical insurance
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- Figure 36: Ownership of PMI and other health and protection products, October 2013
- Significant product overlap
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- Figure 37: Ownership of healthcare and protection products – cross-analysis, October 2013
- The typical PMI subscriber is a 25-54-year-old male AB
- Significant opportunities to improve product penetration
Policyholder Views and Claims Experience
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- Key points
- Three out of four PMI member are satisfied with their level of cover
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- Figure 38: Agreement with statements about policy cover and claims experiences, by type of policy held, October 2013
- Around one in six corporate PMI members don’t know what cover level they have
- Relatively low level of PMI claims are turned down
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- Figure 39: Claims experience, October 2013
- No-claims bonuses are more common in the personal sector…
- … as are rewards for leading a healthy lifestyle
Downgrading, Cancelling and Switching Intentions
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- Key points
- Limited amount of customer churn despite strong intentions
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- Figure 40: Past experience of and future intentions relating to downgrading and cancelling cover and switching providers, by type of policy held, October 2013
- Around a fifth of personal PMI members are seriously considering downgrading their cover
Market Barriers
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- Key points
- The high cost of cover is the number one barrier to take-up
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- Figure 41: Reasons for not having private health insurance, October 2013
- A large minority are content to be treated on the NHS
- One in 20 are lapsed policyholders
Difficulty Accessing Healthcare on the NHS
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- Key points
- Getting to see a GP during work hours is top gripe
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- Figure 42: Experience of difficulties or delays in getting access to NHS care, October 2013
- PMI members are more likely to have experienced difficulty or delay
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- Figure 43: Experience of difficulties or delays in getting access to NHS care, October 2013
Views on the NHS, Private Healthcare and Insurance
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- Key points
- Two in five adults expect NHS waiting lists to grow over the next five years
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- Figure 44: Agreement with statements about the NHS, private healthcare and health insurance, October 2013
- One in three are fans of private healthcare
- Potential for further growth
Appendix – Additional Product Information
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- PMI cover types
Appendix – Market Size and Forecast
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- Historical market data
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- Figure 45: Number of subscribers and people covered by PMI, by sector, 2008-12
- Figure 46: Gross earned premiums, by sector, 2008-12
- Forecast of the volume of PMI subscribers
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- Figure 47: Forecast of PMI subscribers, by sector, 2013-18
- Forecast of gross earned premiums
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- Figure 48: Forecast of PMI gross earned premiums, at current and constant prices, 2008-18
- Total market forecast – best- and worst-case scenarios
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- Figure 49: Forecast of total PMI gross earned premiums – best- and worst-case scenarios, at current prices, 2013-18
- Corporate sector forecast
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- Figure 50: Forecast of new corporate PMI premiums, at current prices – fan chart, 2008-18
- Figure 51: Forecast of corporate PMI premiums – best- and worst-case scenarios, at current prices, 2013-18
- Personal sector forecast
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- Figure 52: Forecast of personal PMI premiums, at current prices – fan chart, 2008-18
- Figure 53: Forecast of personal PMI premiums – best- and worst-case scenarios, at current prices, 2013-18
- Forecast methodology
- Fan chart explanation
Appendix – Ownership of Health Cover & Protection Products
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- Figure 54: Ownership of private health insurance, by demographics, October 2013
- Figure 55: Ownership of other health cover and protection products, by demographics, October 2013
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Appendix – Policyholder Views and Claims Experience
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- Figure 56: Policyholder attitudes and awareness of cover, by demographics, October 2013
- Figure 57: Policyholder attitudes and claims experience, by demographics, October 2013
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Appendix – Downgrading, Cancelling and Switching Intentions
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- Figure 58: Policyholders who are seriously considering downgrading their PMI cover, cancelling their policy or switching provider, October 2013
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Appendix – Market Barriers
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- Figure 59: Top six reasons for not having private health insurance, by demographics, October 2013
- Figure 60: Next six reasons for not having private health insurance, by demographics, October 2013
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Appendix – Difficulty Accessing Healthcare on the NHS
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- Figure 61: Own experience of difficulties accessing NHS healthcare (top six), by demographics, October 2013
- Figure 62: Own experience of difficulties accessing NHS healthcare (next six), by demographics, October 2013
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Appendix – Views on the NHS, Private Healthcare and Insurance
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- Figure 63: Attitudes towards the NHS, private healthcare and health insurance, by demographics, October 2013
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