Table of Contents
Executive Summary
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- The market
- The health insurance market is mature and stable
- Static premium income
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- Figure 1: Medical expenses insurance gross written premiums, 2016-19
- Health insurers’ margins squeezed by rising medical inflation
- NHS feeling the strain
- Average PMI premiums boosted by IPT rises
- Companies and brands
- A heavily consolidated market
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- Figure 2: Top six providers’ estimated share of medical expenses insurance GWP (UK only), 2017
- Technology drives new innovation
- Insurers give greater focus to mental health
- The consumer
- Although much cheaper, cash plans have a lower take-up rate than PMI
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- Figure 3: Ownership of health insurance, health cash plans and related products, August 2018
- Claims experience
- Both the PMI and HCP markets enjoy fairly high levels of customer loyalty
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- Figure 4: Intentions to renew, switch or cancel health policy at next renewal, by cover type, August 2018
- Good levels of interest in health cover products…
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- Figure 5: Interest in health insurance products by the non-insured, August 2018
- …but lack of affordability remains a key barrier to increasing take-up
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- Figure 6: Amount can afford to pay in monthly premiums, by type of product interested in, August 2018
- Key selling points of PMI
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- Figure 7: Most appealing health insurance benefits, August 2018
- Key selling points of a cash plan
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- Figure 8: Most appealing HCP benefits, August 2018
- Level of public concern about the NHS
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- Figure 9: Level of concern regarding various health-related issues, August 2018
- What we think
Issues and Insights
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- PMI – the problem of affordability
- The facts
- The implications
- HCPs – raise awareness of additional health benefits
- The facts
- The implications
The Market – What You Need to Know
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- The health insurance market is mature and stable
- The market will remain flat in 2018-19
- Profit margins squeezed by rising cost pressures
- NHS under strain
- Product affordability compounded by IPT rises
Market Size
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- Number of policies in force
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- Figure 10: Number of PMI policies and health cash plans in force, 2018
- Personal PMI sector in steady decline due to affordability constraints
- Premium income to stabilise, at least over the short term
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- Figure 11: Medical expenses insurance gross written premiums, 2016-19
Claims Incurred and Underwriting Result
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- The value of net claims incurred was up 10% in 2017…
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- Figure 12: Medical expenses insurance – claims incurred and other outgoings (ABI members only), 2016-17
- …impacting on profitability
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- Figure 13: Medical expenses insurance – Claims and underwriting ratios (ABI members only), 2016-17
Market Drivers
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- Brexit uncertainty is bad for business
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- Figure 14: Key economic indicators, August 2018
- Brexit may increase demand for international PMI
- More patients in the UK are waiting over 18 weeks for treatment
- NHS England managing to meet the 6-week wait deadline for diagnostic tests despite higher demand levels
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- Figure 15: Number of NHS patients waiting for diagnostic tests and procedures, and proportion who are waiting over six weeks (monthly basis) – England, June 2008 to June 2018
- NHS England continues to fall short of cancer waiting list targets
- Extra NHS funding is not enough
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- Figure 16: NHS England – Total departmental expenditure limits in real terms, 2013/14-2020/21
- GP numbers decline while demand rises
- Health cash plans compete with vision- and dental-only plans
- Most adults pay towards their dental care
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- Figure 17: Cost of NHS dental treatment in England, 2010/11-2018/19
- 70% of UK adults wear prescription eyewear
Regulatory and Legislative Changes
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- IDD deadline approaches
- IPT increase pushes up cost of health insurance
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- Figure 18: Changes to the standard rate of IPT, 2011-17
Companies and Brands – What You Need to Know
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- The UK health insurance market is heavily consolidated
- Strong competition between providers
- Technology leveraged to offer new services and benefits
- Insurers turn their attention to mental health
- Vitality ups the ante by boosting adspend
Market Share
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- Bupa and AXA PPP are the big heavyweights
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- Figure 19: Providers’ medical expenses insurance GWP (UK only), 2016-17
- Top performers in 2017
- Significant others
Competitive Strategies
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- Market movements
- M&A activity continues
- Westfield Health acquires UK Healthcare
- Cash plan providers move into occupational health and digital healthcare services
- Other recent acquisitions
- APRIL UK withdraws from PMI market
- Aviva pulls out of IPMI market
- AXA sells its whole-of-market healthcare intermediary
- New distribution partnerships
- Bupa and Waitrose establish an exclusive partnership
- British Friendly offers cash plan to income protection policyholders
- Industry innovation
- Targeting the fit and active
- Simplyhealth launches Active Plan
- AXA PPP publishes guide to promote fitness at work
- Harnessing digital technology
- The Exeter adopts a digital approach with launch of new PMI policy Health+
- Greater focus on mental health
- Other new products and services
- Bupa launches prostate cancer checks and cancer self-referral service
- National Friendly launches PMI plan to tackle long GP waiting times
- Health Shield offers health screening to entire workforce
Advertising and Marketing Activity
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- Vitality boosts adspend in an effort to engage…
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- Figure 20: Above-the line, online display and direct mail advertising expenditure on health cover products by selected providers, 2015/16-2017/18
- …and adopts an integrated approach
- Benenden Health – a new name, a new campaign
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- 15% of UK adults have PMI, while 4% have a cash plan
- Cancellation intentions among both PMI and HCP customers is very low
- Expanding the market hampered by lack of affordability
- Faster access to treatment is the top PMI selling point while money towards dental expenses is the most attractive benefit of a cash plan
- Many people are concerned about the health of the NHS
Ownership of Medical Expenses Insurance
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- 15% of UK adult internet users have private health insurance
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- Figure 21: Ownership of health insurance, cash plans and related products, August 2018
- 3% have a condition-specific policy
- 5% have IPMI
- 4% have a cash plan
- Significant overlap between products
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- Figure 22: Ownership of health insurance, cash plans and related products – Cross-analysis, August 2018
- Demographic profile of customers
PMI Policyholders – Claims Experience and Renewal Intentions
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- 50% of customers have made a claim on their health insurance
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- Figure 23: Policyholder claims history, by cover type, August 2018
- Three times as many policyholders are expecting to upgrade or extend existing cover as downgrade
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- Figure 24: Intentions to renew, switch or cancel health policy at next renewal, by cover type, August 2018
- Only 1% are expecting to cancel cover at their next renewal
HCP holders – Claims Experience and Renewal Intentions
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- 61% of HCP customers have made at least one claim within the past 12 months
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- Figure 25: HCP subscriber claims history, August 2018
- 8% are planning to switch and just 2% to cancel cover altogether
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- Figure 26: Intentions to renew, switch or cancel HCP at next renewal, August 2018
The Non-insured and Interest in Health Cover Products
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- Significant interest in health insurance products
- 5% are interested in getting a treatment-only policy…
- …while 3% are keen on the concept of co-payment
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- Figure 27: Interest in health insurance products by the non-insured, August 2018
- 11% are keen on health cash plans
- Just 4% of those interested in health cover products can afford to pay £50 in monthly premiums
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- Figure 28: Amount can afford to pay in monthly premiums, by type of product interested in, August 2018
Most Appealing Product Benefits
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- Faster access to treatment is the main selling point of PMI
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- Figure 29: Most appealing health insurance benefits, by those who have cover and those interested in getting it, August 2018
- Preferences differ between the sexes and across the age range
- 72% of potential prospects find cash towards dental treatment appealing
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- Figure 30: Most appealing HCP benefits, by those who have a cash plan and those interested in getting one, August 2018
Concerns about the NHS, Health Costs and Getting Cover for a Pre-existing Condition
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- 64% are worried about waiting times to see a specialist
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- Figure 31: Level of concern regarding various health-related issues, August 2018
- 54% are concerned about the cost of dental treatment
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
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