Table of Contents
Executive Summary
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- The market
- The IPT increase is set to make future growth challenging
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- Figure 1: Forecast of total private medical insurance gross earned premiums, 2010-20
- The number of subscribers is slipping year on year
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- Figure 2: Number of subscribers, by sector, 2010-14
- Companies and brands
- High concentration gives biggest players access to the best data
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- Figure 3: PMI providers’ market share, by gross earned premium, 2014*
- Focusing on healthy lifestyles is great for marketing but also improves profitability
- The consumer
- The same proportion of people say they set money aside for treatment as hold PMI policies
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- Figure 4: Ownership of insurance or savings products for health needs, July 2015
- Over half rate their own health as good or excellent
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- Figure 5: Perceived state of health, July 2015
- Everyday spending on health is more significant than many think
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- Figure 6: Proportion that have had an appointment with a GP in the last two years, by age and gender, July 2015
- Access problems are overshadowing the quality of the NHS
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- Figure 7: Satisfaction with the NHS, July 2015
- The NHS legacy dictates what people are willing to pay for
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- Figure 8: Proportion expecting to pay for alternative medical treatments, by generation, July 2015
- The jury is out on the true ethics and value of PMI
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- Figure 9: Attitudes towards cost and value in private medical insurance, July 2015
- Parents’ protective instinct may provide opportunities
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- Figure 10: Attitudes towards coverage in private medical insurance, July 2015
- Negative attitudes towards the NHS persist despite positive experiences
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- Figure 11: Attitudes towards the NHS in competition with private healthcare, July 2015
- What we think
Issues and Insights
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- Targeting specific NHS bottlenecks could pay dividends
- The facts
- The implications
- Insurers can make more out of remote and at-home services
- The facts
- The implications
The Market – What You Need to Know
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- Gross earned premiums rose by 2.8% in 2014…
- …although numbers are dwindling and future growth will be challenging
- Flat disposable income keeps PMI out of reach for many
- Rising employment spells opportunity for big corporate distribution
- Competitive pressure from more affordable products increases
- The NHS will struggle to maintain high standards
- Surprise IPT rise to be passed on through prices
Market Size and Forecast
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- Rising prices drive an artificial return to growth
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- Figure 12: Gross earned premium and claim amounts incurred, by sector, 2010-14
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- Figure 13: Average annual PMI premium, by sector, 2004-14
- The number of subscribers is sliding year on year…
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- Figure 14: Number of subscribers, by sector, 2010-14
- …and the number of people covered is following suit
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- Figure 15: Number of people covered, by sector, 2010-14
- The IPT increase is set to make future growth challenging
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- Figure 16: Forecast of total private medical insurance gross earned premiums, 2010-20
- Figure 17: Forecast of total private medical insurance gross earned premiums, at current and constant prices, 2010-20
Market Drivers
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- Disposable income stagnates despite the economic recovery
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- Figure 18: GDP per head at current market prices, and real household disposable income per head, Q1 2009-Q1 2015
- Rising employment lifts the prospects of corporate distribution
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- Figure 19: Total UK unemployment rate among people aged 16+, January 2009-May 2015
- Competitor products take precedence for ad-hoc medical needs
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- Figure 20: Top eight UK healthcare cash plan providers*, by gross earned premium, 2011-14
- Self-pay shows double-digit growth
- NHS keeps quality high but struggles with access
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- Figure 21: Number of doctors* registered on the List of Registered Medical Practitioners (LRMP) at the end of each year (point in time), 2005-14 and September 2015
- Surprise IPT increase set to push insurers to the limit…
- …and marginal profitability gains will do little to ease the pain
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- Figure 22: Ratio of claims amounts incurred to gross earned premiums, 2000-14
Key Players – What You Need to Know
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- High concentration gives biggest players access to the best data
- Focusing on healthy lifestyles is great for marketing but also improves profitability
- TV advertising is the star of the show as insurers vie for market share
Market Share
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- AXA mounts a challenge to Bupa’s market dominance
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- Figure 23: PMI providers’ market share, by gross earned premium, 2014
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- Figure 24: PMI market share, by gross earned premium, 2010-14
Competitive Strategies
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- The pursuit of health, wealth and happiness
- VitalityHealth (formerly PruHealth)
- AXA PPP
- The rise of the hassle-free GP
- Aviva
- Exeter Friendly
- VitalityHealth (formerly PruHealth)
- Bupa
Advertising and Marketing Activity
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- Adspend is dominated by TV and direct mail
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- Figure 25: Recorded above-the-line, online display and direct mail advertising expenditure on private healthcare, by media type, 2012/13-2014/15*
- Bupa invests heavily in promoting its brand
- Smaller firms weigh in as they target more market share
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- Figure 26: Top 15 advertisers of private healthcare insurance, by recorded above-the-line, online display and direct mail advertising, 2012/13-2014/15*
- Search and social media play an increasing role
- Note on NMR data
The Consumer – What You Need to Know
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- Setting money aside is as popular as arranging PMI
- Most people are confident about the state of their health
- The quality of the NHS is being negated by access issues
- People’s spending on everyday health is stacking up
- 30% expect to pay for treatments unavailable on the NHS
- Few think PMI is unethical, but paying for it raises questions
- Parents could future-proof the industry by protecting their children
- Broad negative perceptions of the NHS provide opportunities for insurers
Product Ownership
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- The same proportion of people say they set money aside for treatment as have PMI cover
- More are choosing to pay their own way
- Health cash plans suffer from perceptions of everyday treatment
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- Figure 27: Ownership of insurance or savings products for health needs, July 2015
- Men more likely to lead involvement with private healthcare
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- Figure 28: Product ownership, by gender, July 2015
- 16-24s warrant more attention from insurers
- Older people locked out of PMI market due to risk status
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- Figure 29: Product ownership, by age, July 2015
People’s Assessment of their Overall Health
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- Over half rate their own health as good or excellent
- Poor health represents an ethical concern for insurers
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- Figure 30: Perceived state of health, July 2015
- Low income can restrict access to PMI for those who need it most
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- Figure 31: Perceived state of health, by gross annual household income, July 2015
Use of Health Services
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- Everyday spending on health is more significant than many think
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- Figure 32: Personal use of routine health services, July 2015
- The demand for GP services is high
- Men are risking serious health issues by delaying diagnosis
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- Figure 33: Proportion that have had an appointment with a GP in the last two years, by age and gender, July 2015
- The need for non-routine health services can be limited through better everyday care
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- Figure 34: Personal use of non-routine health services, July 2015
- 18% of people have had little contact with healthcare services in last two years
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- Figure 35: Number of health-related activities in the last two years, July 2015
Satisfaction with the NHS
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- Access problems are overshadowing the quality of the NHS
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- Figure 36: Satisfaction with the NHS, July 2015
- Experience of the NHS only improves the perception of quality
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- Figure 37: Proportion that are likely to have experience of NHS GPs, by satisfaction with selected aspects of NHS care, July 2015
- A care crisis in London brings opportunity for insurers
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- Figure 38: Proportion that have any satisfaction with quality of medical care and access to GPs, by region, July 2015
Expectations about Paying for Health Services
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- The NHS legacy dictates what people are willing to pay for
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- Figure 39: Proportion expecting to pay for health services, July 2015
- Private healthcare can deputise for NHS services that are jammed with demand
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- Figure 40: Proportion expecting to pay for alternative medical treatments, by generation, July 2015
- People are underprepared for future mental health needs
Attitudes towards Private Medical Insurance
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- People are unsure about paying for private healthcare
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- Figure 41: Attitudes towards cost and value in private medical insurance, July 2015
- The jury is out on the true ethics and value of PMI
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- Figure 42: Agreement with the statement ‘Private medical insurance is unethical’, by age, July 2015
- Parents’ protective instinct may provide insurers with opportunities
- Care is a difficult subject for insurance to address
- Single-illness policies lack mass appeal despite a greater chance of diagnosis
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- Figure 43: Attitudes towards coverage in private medical insurance, July 2015
- Negative attitudes towards the NHS persist despite positive experiences
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- Figure 44: Attitudes towards the NHS in competition with private healthcare, July 2015
Appendix – Market Size and Forecast
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- Figure 45: Forecast of annual earned private medical insurance premiums, 2015-20
- Forecast methodology
- Fan chart explanation
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Appendix – Further Analysis
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- Figure 46: CHAID analysis on attitudinal statements, July 2015
- Note on CHAID analysis
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