Table of Contents
Executive Summary
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- The market
- Standard model predicts consistent premium growth
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- Figure 1: Forecast of total PMI gross earned premiums, 2009-19
- Market factors
- Economic recovery
- Slowing rate of premium inflation
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- Figure 2: Average PMI premium, by sector, 2003-13
- Remedial actions of the Competition Markets Authority
- The NHS spending gap
- The NHS as a key feature of the 2015 general election campaign
- Companies, products and innovations
- A highly concentrated market
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- Figure 3: Top five providers’ market shares, based on subscription income, 2013
- Product innovation
- Brand promotion
- The consumer
- Ownership of private medical insurance
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- Figure 4: Consumer ownership of insurance or savings products for health needs, July 2014
- Consumers’ assessment of their health
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- Figure 5: Consumer perceived state of health, July 2014
- Consumer use of routine health services
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- Figure 6: Personal and family use of routine health services, July 2014
- Consumer use of non-routine health services
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- Figure 7: Personal and family-use of non-routine health services
- Consumer attitude towards private medical insurance
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- Figure 8: Consumer attitude towards Private Medical Insurance
- Consumer satisfaction with the NHS
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- Figure 9: Consumer satisfaction with the NHS, July 2014
- Consumer interest in additional health services
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- Figure 10: Consumer interest in paying for additional health services, July 2014
- What we think
Issues and Insights
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- The traditional PMI business model is challenged by changes to the NHS
- The facts
- The implications
- The proliferation of health information is causing confusion for young consumers
- The facts
- The implications
- Increasing prevalence of long-term conditions puts pressure on carers
- The facts
- The implications
- Exposing consumers to private healthcare through cheaper alternative products first can encourage PMI sales later on
- The facts
- The implications
Trend Application
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- Trend: Guiding Choice
- Trend: Prove It
- Futures: Human
Market Drivers
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- Key points
- The economic recovery is becoming more established…
- …but wage growth remains stagnant…
- …and the fall in unemployment can be linked to a marked increase in the numbers of self-employed
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- Figure 11: Proportional distribution of PMI subscribers, people covered and gross earned premiums, by sector, 2013
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- Figure 12: Number of PMI subscribers and people covered, by sector, 2009-13
- Cost containment efforts are beginning to combat premium inflation
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- Figure 13: Average PMI premium, by sector, 2003-13
- Lapse rates are falling
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- Figure 14: New business and lapse rates for UK PMI, 2009-13
- Remedial action taken by the Competition Markets Authority will go some way towards reducing costs
- The NHS is facing significant restrictions on spending…
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- Figure 15: NHS total managed expenditure 2010/11 – 2015/16
- The 2015 general election boost to the NHS
Competitor Products
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- Key points
- Private medical insurance
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- Figure 16: Ownership of insurance or savings products for health needs, July 2014
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- Figure 17: New business and lapse rates for Private Medical Insurance, 2009-13
- Low cost health cash plans are strong competitors in the corporate market
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- Figure 18: New business and lapse rates for health cash plans, 2009-13
- Figure 19: Number of health cash plan subscribers and average price paid, 2010-2013
- New NHS services undermine key added value PMI options for individuals
- …and the new Government Health and Work Service does the same for company subscribers
- The relationship between private healthcare and the NHS is complicated
- Competitive remedies to drive down costs for self-paying consumers
Market SWOT Analysis
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- Figure 20: The PMI market – SWOT analysis, 2014
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Market Size and Forecast
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- Key points
- A positive outlook for the private healthcare market
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- Figure 21: New business and lapses rates for private medical insurance by sector, 2009-2013
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- Figure 22: Number of company paid and individual paid insured subscribers, 2009-2013
- Market forecast
- The value of the market should increase consistently
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- Figure 23: Forecast of total PMI gross earned premiums, 2009-19
- Figure 24: Forecast of value of private medical insurance annual premiums, 2009-19
- Increasing numbers of subscribers
- Increasing average premium price
- Market uncertainty
- Forecast methodology
- Fan chart explanation
Channels to Market
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- Key points
- Overall influence of intermediaries decreases
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- Figure 25: Breakdown of PMI sales distribution, 2012 & 2013
- Direct corporate sales are also increasing
- Greater intermediary involvement could boost sales in the individual-paid market
- The growing importance of digital channels
Market Share
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- Key points
- A highly concentrated market dominated by top five providers
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- Figure 26: Top five providers’ market shares, based on subscription income, 2013
- Bupa continues to dominate despite 3% drop in subscription income
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- Figure 27: PMI subscription income, 2009-13
- PruHealth experience sees largest increase in income
Companies and Products
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- Bupa
- PMI market position
- PMI subscription income
- Description
- Product range
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- Figure 28: Bupa’s Independent Policy Options
- Financial performance
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- Figure 29: Key financial performance data for Bupa, 2012-13
- Recent activity
- AXA PPP healthcare
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 30: Key Financial performance data for AXA, 2012-13
- Recent activity
- Aviva
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 31: Key financial performance data for AVIVA, 2011-13
- Recent activity
- PruHealth
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 32: Key Financial Information for Discovery, 2012-13
- Recent activity
- Simplyhealth
- PMI market position
- PMI subscription income
- Description
- Product range
- Financial performance
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- Figure 33: Key financial information for Simplyhealth, 2012-2013
- Recent activity
Who’s Innovating?
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- Key points
- The industry is moving beyond cost containment
- Bupa has grown its mental health coverage
- Aviva’s BacktoBetter improves musculoskeletal services
- Developments in elderly care reflect changing UK demographics
Brand Communication and Promotion
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- Key points
- Advertising expenditure remains restricted for second year running
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- Figure 34: Advertising expenditure on private healthcare insurance
- AXA PPP Healthcare and PruHealth increase advertising expenditure…
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- Figure 35: Top ten advertisers of private healthcare insurance in 2014
- …whilst Bupa and Simplyhealth cut back
- Provider preferences for different media drives variation in predominance of expenditure both overall…
- A note on adspend
Product Ownership
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- Key points
- Penetration of health-related insurance or savings products is low
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- Figure 36: Ownership of insurance or savings products for health needs, July 2014
- Changes to the NHS may encourage greater interest in private cover
- Private medical insurance is the most commonly owned health-related product…
- ...but this may change if providers cannot find ways of attracting a wider range of consumers.
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- Figure 37: Ownership of PMI by employment status, July 2014
Consumers’ Assessment of their Overall Health
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- Key points
- Consumers predominantly perceive themselves as healthy
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- Figure 38: Perceived state of health, July 2014
- Taking a different approach
- Pressures on those in the middle take toll on health
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- Figure 39: Perceived state of health by age, July 2014
- Building brand awareness amongst the young and healthy creates opportunities for the future
- Growing health concerns mean that providers need to find a way of making cover affordable for those with the greatest health needs
- Prioritising healthcare as an essential expense has placebo effect on perceived state of health
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- Figure 40: Consumer perceived state of health, by ownership of health-related insurance products, July 2014
Use of Routine Health Services
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- Key points
- The demand for health-care services is high
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- Figure 41: Personal and family use of routine health services, July 2014
- Personalisation of services can help consumers see the benefits of private medical insurance
- Demand is highest for over-stretched GP services
- Self-employment takes its toll on consumer health
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- Figure 42: Personal use of routine health services, by working status, July 2014
- The effects of caring for dependent family members should not be overlooked
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- Figure 43: Percentage of consumers who have had a family member visit a GP in the past two years, by age, July 2014
- Men are missing out on key preventative opportunities
- Technology can increase interaction amongst hard-to-reach groups
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- Figure 44: Personal use of routine health services by age and gender, July 2014
Use of Non-Routine Healthcare Services
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- Key points
- Time to change perceptions of alternative and specialist therapies
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- Figure 45: Personal use of non-routine healthcare services, July 2014
- Shifting care out of hospitals
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- Figure 46: Personal use of routine health services, by personal use of non-routine health services, July 2014
- Use of both routine and non-routine healthcare services negatively impacts perceptions of health
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- Figure 47: Consumer perceived state of health, by personal use of non-routine health services, July 2014
Attitude towards Private Medical Insurance
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- Key points
- For consumers the existence of the NHS means that private medical insurance is a luxury and not a necessity
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- Figure 48: Attitudes towards private medical insurance, July 2014
- General lack of understanding regarding different policies prevails amongst consumers
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- Figure 49: Ownership of insurance or savings products for health needs by attitude towards the statement ‘It is difficult to know which Private Medical Insurance policy to buy, July 2014
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- Figure 50: Ownership of insurance or savings products for health needs by agreement or disagreement with the statement ‘It is difficult to know which Private Medical Insurance policy to buy, July 2014
- Lack of interaction with the healthcare system leads male consumers to value PMI less
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- Figure 51: Attitude towards the statement ‘private medical insurance is not good value for money’ by gender, July 2014
- Demand for 24/7 services is driving down young consumers opinion of the NHS
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- Figure 52: Attitude towards PMI by age, July 2014
- Ownership of private medical insurance has a positive impact on consumer attitude towards the product…
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- Figure 53: Agreement with the statement ‘Private Medical Insurance is not good value for money’, by PMI ownership, July 2014
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- Figure 54: Agreement with the statement ‘the NHS means that Private Medical insurance is just a luxury’, by PMI ownership, July 2014
- Figure 55: Agreement with the statement ‘private medical insurance gives a standard of care that the NHS can’t match’, by PMI ownership, July 2014
- ...and towards providers
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- Figure 56: Agreement with the statement ‘I trust private medical insurers to treat me fairly,’ by PMI ownership, July 2014
Consumer Satisfaction with the NHS
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- Key points
- Consumers are, by and large, highly satisfied with all aspects of NHS healthcare
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- Figure 57: Satisfaction with the NHS, July 2014
- Opinions on GP services are polarising
- NHS focus on older patients results in younger consumers missing out
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- Figure 58: Satisfaction with areas of NHS care by age, July 2014
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- Figure 59: Personal use of routine health services by age, July 2014
- Flexibility will be a key selling point for younger people
- Health-conscious consumers are the most likely to have a strong opinion on the NHS
- Use of services drives up satisfaction
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- Figure 60: Personal use of routine and non-routine health services by satisfaction with NHS services, July 2014
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- Figure 61: Personal use of non-routine health services by attitude towards the statement ‘private medical insurance is not good value for money,’ July 2014
- Acute and emergency care produces the highest levels of satisfaction
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- Figure 62: Personal use of non-routine health services, by satisfaction or dissatisfaction with access to diagnostic tests on the NHS, July 2014
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- Figure 63: Personal use of non-routine health services, by satisfaction or dissatisfaction with the availability of latest treatments and drugs, July 2014
- Waiting lists are still a concern for people who have had surgery
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- Figure 64: Personal use of hospital surgery by satisfaction or dissatisfaction with NHS waiting lists
Consumer Interest in Additional Health Services
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- Key points
- Lack of consumer interest in paying for services limits opportunities for innovation
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- Figure 65: Health services consumers would be willing to pay for, July 2014
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- Figure 66: Consumer interest in additional services by age and geographic location, July 2014
- Demand for latest treatments risks pushing up premiums
- Empowered consumers are more likely to be willing to pay for healthcare services
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- Figure 67: Consumer perceived state of health by interest in additional health services, July 2014
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- Figure 68: Personal use of routine health services by consumer interest in additional health services, July 2014
- High-frequency, low-severity healthcare services provide the greatest opportunity for new business
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- Figure 69: Personal use of selected routine health services by consumer interest in additional health services, July 2014
- Changing demographics create a need for more flexible family policies
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- Figure 70: Family use of non-routine health services by consumer interest in selected additional health services, July 2014
- Positive experiences with private medical insurers lays the foundation for up-selling
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- Figure 71: Agreement with attitudinal statements about PMI Providers, by willingness to pay for additional services, July 2014
Appendix – Market Share and Forecast
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- Value
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- Figure 72: Best- and wroset-case forecast of the value of private medical insurance annual premiums, 2014-19
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