Consumers and Health Insurance: Inc Impact of COVID-19 - UK - October 2020

OVERVIEW
Key issues covered in this Report
COVID-19: market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on the health insurance market
Figure 1: Short-, medium- and long-term impact of COVID-19 on the health insurance market, October 2020
The market
Market GEP set to contract by 7% over the 2020-21 as a result of the pandemic
Figure 2: Forecast chart of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
A personal PMI policy costs double that of a group policy on a per subscriber basis
The average PMI claim is over £2,000
Cancer accounts for the largest share of claims incurred
Health cash plan market is much smaller in value terms
Companies and brands
PMI is a heavily consolidated market
Figure 3: Estimated market shares of the largest PMI providers, based on gross written premium, 2019
HCP providers operate on very tight margins
Figure 4: Estimated market shares of the largest HCP providers, based on gross written premium, 2019
Pandemic caused major disruption to health services
Claims activity fell sharply during the lockdown
The consumer
12% of adults have PMI, while 5% have a health cash plan
62% pay for their health insurance themselves
Figure 5: Policy payee, July 2020
Significant minority of PMI policyholders are unaware exactly what cover they have
Figure 6: Types of cover included in policy, July 2020
13% of existing PMI policyholders are not planning to renew cover
Figure 7: Attitudes and experiences of policyholders, July 2020
Most people interested in health cover are not willing to pay more than £20 a month in premiums
Figure 8: Amount willing to pay for health insurance by non-policyholders, July 2020
Difficulties accessing healthcare and postponed treatment
Figure 9: Experience of adverse effects of COVID-19 on personal health and wellbeing, July 2020
COVID-19 has increased people’s willingness to use remote health services
Figure 10: Attitudes towards accessing healthcare in the future, July 2020
ISSUES AND INSIGHTS
Telehealth is here to stay and has the potential to offer health insurers vital cost savings
Longer NHS waiting times will boost interest in private healthcare solutions
Adopt a holistic approach to health and wellbeing
THE MARKET – KEY TAKEAWAYS
The pandemic brings fresh challenges and opportunities
Jobs recession means there will be some loss of corporate subscribers
Claims activity will rise steeply once the worst of the crisis is over
Huge NHS backlog will see more patients turning to the private sector
MARKET SIZE AND FORECAST
Recent shift towards virtual services will prevail, providing fresh opportunities post-crisis
Figure 11: Short-, medium- and long-term impact of COVID-19 on health insurance, October 2020
PMI gross premiums forecast to decline by 7% over the 2020-21 period
Figure 12: Forecast chart of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
Figure 13: Value of PMI gross earned premiums, 2015-25 (prepared on 6 October 2020)
Market drivers and assumptions
Figure 14: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 6 October 2020)
Learnings from the last recession
Figure 15: Value of PMI gross earned premiums, 2004-13
Forecast methodology
MARKET SEGMENTATION
Corporate PMI schemes account for 75% of all people covered 
Figure 16: Number of PMI subscribers and people covered, by sector, 2015-19
Growth in premium income driven by corporate sector
Figure 17: PMI gross earned premiums, by sector, 2015-19
In 2019, average personal premium fell for the first time in years
Figure 18: Average PMI premium, by sector, 2010-19
CLAIMS EXPERIENCE
Cost of claims rose 4% in 2019…
Figure 19: PMI number of claimants, claims incurred and average claim value (ABI members only), 2015-19
…while the average claim value for individuals was 59% higher than for corporate subscribers 
Figure 20: PMI claims incurred and average claim value, by sector (ABI members only), 2015-19
Largest share of claims relates to musculoskeletal conditions 
Figure 21: Proportional distribution of claims incurred and number of claimants, by condition, 2018 and 2019
OTHER HEALTH COVER PRODUCTS AND SOLUTIONS
Healthcare trusts offer employers an alternative to corporate PMI
Figure 22: Healthcare trusts – number of subscribers, people covered and gross earned premiums, 2015-19
Health cash plans can be viewed as both complementary and a competitor product
Health cash plan market operates on very low margins
Figure 23: Health cash plans – number of subscribers, gross earned premiums and claims incurred, 2017-19
Cash plans compete with standalone vision and dental plans
MARKET DRIVERS
Job losses will reduce the corporate headcount
Support measures introduced in place of the furlough scheme are not as generous
Certain sectors and age groups more at risk than others
Could a hefty COVID-19 spending bill prompt a further increase in IPT?
Figure 24: Changes to the standard rate of IPT, 2011 onwards
NHS waiting times were already at record high before the crisis
Millions face treatment delays and cancellations
Further funding needed to tackle backlog of patients waiting treatment
Figure 25: NHS England – resource budget (excluding depreciation), in real terms, 2015/16-2020/21
Cancer waiting times lengthen
New technology helps to improve GP access
COMPANIES AND BRANDS – KEY TAKEAWAYS
Health insurance is a heavily consolidated market…
…which is continually subjected to rising cost pressures
Telehealth paves the way forward
Greater emphasis on mental health and wellbeing services
MARKET SHARE
Market leader Bupa grew customer numbers in 2019
Figure 26: Largest providers of PMI and health cash plans, by premium income, 2018 and 2019
Top four control around 95% of the PMI market
Figure 27: Estimated market shares of the largest PMI providers, based on gross written premium, 2019
CS Healthcare to merge with Bupa
Simplyhealth reports growth in corporate business
Figure 28: Estimated market shares of the largest HCP providers, based on gross written premium, 2019
Simplyhealth sells pet health business to concentrate on human health
COMPETITIVE STRATEGIES AND INNOVATION
Strategic developments
Two providers restructure while a third plans a rebrand
COVID-19 response
Providers make pledges to refund customers…
…and introduce support measures
HCP providers similarly respond
New innovation centres on new digital capability and telehealth
Pandemic has put mental health under the spotlight
New product launches
Vitality introduces new preventative healthcare benefits for the SME market
Aon offers ‘affordable’ health plan in partnership with Equipsme
ADVERTISING AND MARKETING ACTIVITY
Vitality and Bupa top adspend list in 2019/20
Figure 29: Total above-the-line, online display and direct mail advertising expenditure on health insurance, 2015/16-2019/20
Vitality’s ad to inspire people to stay safe, fit and healthy at home during lockdown
Insurers shine a light on mental health issues
Nielsen Ad Intel coverage
THE CONSUMER – KEY TAKEAWAYS
Product innovation is needed to develop more affordable PMI options 
Providers need to address dissatisfaction caused by disruption to cover…
…and raise awareness of new mental health and wellbeing services
Significant interest in cover but price remains the main barrier
Delayed care will create demand for private healthcare
Interest in virtual health services has been boosted by pandemic experience
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
Public concern about catching coronavirus starts to rise again 
Figure 30: Level of concern about risk of exposure to COVID-19, W1-W28
What this means for the health of the nation
Consumer spending on healthcare products likely to be maintained
Figure 31: Anticipated changes in expenditure on healthcare, household care, home and garden products and leisure and entertainment, W28 (17-25 September 2020)
Many adults still feel “uncomfortable” with the idea of going to the gym
Figure 32: Level of comfort participating in various activities, W28 (17-25 September 2020)
Wellbeing is more important than ever before
Figure 33: Key factors driving consumer behaviour around wellbeing, July 2020
PRODUCT OWNERSHIP
12% of UK adults have private health insurance
Figure 34: Ownership of health and other insurance products, in order of significance, July 2020
Household income is a major determinant of PMI ownership
Few people have both PMI and a health cash plan
3% of UK adults have both PMI and dental insurance
72% of PMI policyholders are either paying part or all of the premium themselves 
Figure 35: Policy payee, July 2020
Joint and family policies are fairly prevalent
Figure 36: Policyholders covered, July 2020
TYPES OF HEALTH COVER HELD
Only 35% of policyholders appear to have comprehensive cover
Figure 37: Types of cover included in policy, July 2020
Personal subscribers are more engaged
Figure 38: Types of cover included in policy, by who pays for policy, July 2020
Interest in cancer cover likely to increase post-pandemic
Figure 39: Types of cover included in policy, by ownership of top four cover types, July 2020
Increased awareness of mental health cover could boost engagement
POLICYHOLDER SATISFACTION AND RENEWAL INTENTIONS
13% of PMI policyholders are not planning to renew cover
Figure 40: Attitudes and experiences of policyholders, July 2020
One in three policyholders have experienced COVID-19 disruption to their cover 
Figure 41: Attitudes and experiences of policyholders, by those planning to renew their policy and those who’ve experienced disruption to cover, July 2020
High degree of correlation between having experienced disruption and receiving rewards
Individual policyholders are more likely to have experienced disruptions…
Figure 42: Attitudes and experiences of policyholders, by who pays for policy, July 2020
…and yet satisfaction levels are much lower among the latter
ASSESSING INTEREST AND AFFORDABILITY AMONG NON-POLICYHOLDERS 
Less than 1% of the non-insured would be willing to pay over £100 in monthly premiums
Figure 43: Amount willing to pay for health insurance by non-policyholders, July 2020
Opportunity for health cash plans and limited health cover products
Dental care is one of the most popular health insurance benefits
Figure 44: Most appealing benefits to non-policyholders, July 2020
Scope to triple the size of the health cash plan market
IMPACT OF COVID-19 ON CONSUMER HEALTH AND WELLBEING
Pandemic has had a huge impact on the nation’s health
Figure 45: Experience of adverse effects of COVID-19 on personal health and wellbeing, July 2020
One in three delayed contacting their GP about a health concern at the height of the pandemic
PMI policyholders are more likely to feel their health had been compromised
Figure 46: Experience of adverse effects of COVID-19 on personal health and wellbeing, by those who have PMI and those with an HCP, July 2020
28% of PMI policyholders experienced treatment delays as a result of COVID
ACCESSING HEALTHCARE IN THE FUTURE
32% of adults would consider private options because of increased NHS waiting times
Figure 47: Attitudes towards accessing healthcare in the future, July 2020
Three in five adults are more willing to use virtual health services in future
APPENDIX – DATA SOURCES AND ABBREVIATIONS 
Abbreviations
Consumer research methodology