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Health Cash Plans and Private Medical Insurance - UK - July 2010

This report examines the PMI and health cash plan markets, providing analysis of the current market size, market share, leading players, product developments and distribution trends. Background issues such as the role of the NHS, the rising cost of healthcare, claims trends and the role of health insurance within employee benefit schemes are also considered. Mintel’s exclusive consumer research provides an insight into the ownership of health insurance products, the preference for different health cash plan benefits and general attitudes towards healthcare and health insurance.

  • Almost two-thirds of adults believe the NHS does a really good job, although nearly one in three NHS supporters still have some type of healthcare cover in place.
  • Support for the NHS is higher among those with employer-arranged cover, while those to have made independent arrangements are more likely to have concerns about NHS services.
  • Under-35s are among those most concerned about NHS waiting lists and are therefore likely to be increasingly dissatisfied should waiting times increase over the next few years.
  • Health insurance small print and policy exclusions appear to be off-putting for the minority of adults who have money set aside for their healthcare needs.
  • Existing health cash plan holders are much more likely than the wider population to appreciate cash provided for hospital admissions and specialist/private consultations.
  • Many typical cash plan benefits appeal to different age groups, which suggests that providing flexibility in the selection of benefits will ensure the product appeals to a wider range of people.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Market definitions
          • Abbreviations
          • Future Opportunities

            • Helping to create a healthy and happy workforce
              • PMI as a legacy
              • Market in Brief

                • PMI subscriber numbers decline by 5% during 2009
                  • Figure 1: Number of subscribers and people covered by PMI, by sector, 2003-10
                • Health cash plan contributors fall by more than 5% during 2009
                  • Figure 2: Number of healthcare cash plan subscribers, people covered and contribution income earned, 2003-10
                • Rising medical costs present a major headache for health insurers
                  • NHS creates challenges and opportunities for health insurers
                    • IPT increase could lead to increased interest in healthcare trusts
                      • Bupa dominates the PMI market
                        • Figure 3: PMI provider market shares, by subscription income, 2009
                      • Simplyhealth is the major player in the health cash plan market
                        • Economic conditions reflected in recent product development
                          • Intermediaries see their share of market increase
                            • A quarter of adults have some type of healthcare cover
                              • Figure 4: Types of insurance or savings have for health needs, April 2010
                            • Benefit preferences differ between existing and non-plan holders
                              • Figure 5: Cash plan benefit preferences – all adults and existing plan holders, April 2010
                            • Consumers are broadly supportive of the NHS
                              • Figure 6: Attitudes towards healthcare and healthcare cover, April 2010
                          • Internal Market Environment

                            • Key points
                              • NHS spending has increased by more than 60% since 2003/04...
                                • Figure 7: Total public spending on the NHS, 2003/04-2010/11
                              • ...but NHS budget is likely to face increased pressure
                                • Waiting list times will be placed under scrutiny
                                  • Figure 8: Inpatient waiting times (England), 2007-10
                                  • Figure 9: Outpatient waiting times, referral (England), 2007-10
                                • Growth in cancer rates creates a challenge for both the NHS and PMI providers
                                  • Figure 10: Age-standardised (European) incidence and mortality rates, all cancers (excluding non-melanoma skin cancer), Great Britain 1975-2008
                                • Funding cancer drugs evokes an emotive response
                                  • PMI claims costs on an upward trend
                                    • Figure 11: Value of total PMI claims and as a proportion of GEP, 2002-09
                                  • Providing sustainable PMI products
                                    • Premiums growing faster in the personal sector
                                      • Figure 12: Average PMI premiums, by corporate and personal sectors, 2002-09
                                    • HCP claims fall as contribution income falls
                                      • Figure 13: Amount of HCP cash benefits paid and benefits paid as a percentage of contribution income earned, 2002-09
                                  • Broader Market Environment

                                    • Key points
                                      • A more cautious approach to expenditure
                                        • Figure 14: Agreement with the statement ‘I spend money more carefully than I used to’, 2005-09
                                      • PMI forms an important part of employee benefit packages
                                        • Figure 15: Proportion on employers offering particular benefits as core, March 2010
                                      • Employers increasingly looking for ROI
                                        • Figure 16: Trends in absence levels, 1999-2009
                                      • IPT increase is likely to impact the corporate PMI market
                                        • The argument for tax relief
                                          • Solvency II could have impact for some cash plan providers
                                            • A lack of trust remains a major sticking point
                                            • Competitive Context

                                              • Key points
                                                • The NHS – a national treasure
                                                  • NHS to face growing budgetary pressures
                                                    • Private healthcare in the NHS
                                                      • Self-insured medical expenses schemes are expected to grow
                                                        • Figure 17: Number of subscribers and people covered by healthcare trust schemes, 2002-09
                                                      • 5% of adults have money set aside for medical expenses
                                                      • Strengths and Weaknesses in the Market

                                                          • Figure 18: Strengths and weaknesses in the health insurance market, 2010
                                                      • Who’s Innovating?

                                                        • Key points
                                                          • Affordable health insurance
                                                            • Filling in the gaps
                                                              • Combining PMI and health cash plans
                                                                • Flexibility and affordability
                                                                  • Taking health insurance online
                                                                    • Lowering premiums through restricting treatment choice
                                                                      • Cancer – a focus for product development
                                                                        • Are health incentive schemes taking a back seat?
                                                                          • Reducing the impact of IPT
                                                                          • Trade Perspective

                                                                              • Economic uncertainty creates a challenge for health insurers
                                                                                • Insurers also face challenge from rising medical costs
                                                                                  • Changes to the NHS could create opportunities for innovation
                                                                                    • Product development and innovation
                                                                                      • The danger of a price war in the cash plan market
                                                                                        • Cash plan opportunities and challenges
                                                                                          • Intense competition in the broker market leads to an increase in switching activity
                                                                                            • Online sales channels have limited appeal
                                                                                            • Market Size

                                                                                              • Key points
                                                                                                • Recession leads to a 5% decline in PMI subscribers
                                                                                                  • Figure 19: Number of subscribers and people covered by PMI, by sector, 2003-10
                                                                                                • Challenging conditions expected to persist into 2010
                                                                                                  • Corporate PMI premiums fall by 3% during 2009
                                                                                                    • Figure 20: Gross earned premiums (GEP) for PMI, by sector, 2002-10
                                                                                                  • Health cash plan market declines by more than 5% in 2009
                                                                                                    • Figure 21: Number of healthcare cash plan subscribers, people covered and contribution income earned, 2003-10
                                                                                                  • Market forecast
                                                                                                    • Subscriber numbers expected to increase by 5% over the next five years
                                                                                                      • Figure 22: Forecast for number of subscribers and people covered by PMI, BY sector 2004-15
                                                                                                    • Premiums will continue on an upward trend
                                                                                                      • Figure 23: Gross earned premiums (GEP) for PMI, by sector 2004-15
                                                                                                    • Health cash plan market likely to experience subdued growth
                                                                                                      • Figure 24: Forecast for number of healthcare cash plan subscribers, people covered and contribution income earned, 2004-15
                                                                                                  • Market Share

                                                                                                    • Key points
                                                                                                      • Bupa dominates the PMI market…
                                                                                                        • Figure 25: PMI provider market shares, by subscription income, 2009
                                                                                                        • Figure 26: Subscription income of the top ten PMI providers, 2005-09
                                                                                                      • …and Simplyhealth is the largest provider of HCPs
                                                                                                        • Figure 27: HCP market share, by contribution income, 2005-09
                                                                                                    • Companies and Products

                                                                                                        • Major players
                                                                                                          • Aviva
                                                                                                            • AXA PPP healthcare
                                                                                                              • Bupa
                                                                                                                • PruHealth
                                                                                                                  • Simplyhealth
                                                                                                                    • Standard Life Healthcare
                                                                                                                    • Channels to Market

                                                                                                                      • Key points
                                                                                                                        • Corporate market relies heavily on intermediaries
                                                                                                                          • Figure 28: Proportional distribution of PMI sales, by sales channel, 2005-09
                                                                                                                        • Direct channels account for more than two thirds of personal PMI
                                                                                                                          • Aggregator usage likely to increase
                                                                                                                            • HCPs are mainly sold through direct channels
                                                                                                                              • Figure 29: Proportional distribution of HCP sales distribution, 2008 and 2009
                                                                                                                          • Brand Communication and Promotion

                                                                                                                            • Key points
                                                                                                                              • PMI adspend falls but not as steeply as anticipated
                                                                                                                                • Figure 30: Private medical insurance adspend, 2007-09
                                                                                                                              • Bupa tops the advertiser list and accounts for 35% of sector adspend
                                                                                                                                • Figure 31: Top 15 advertisers of PMI, by expenditure, 2007-09
                                                                                                                              • Product launches and rebrands boost adspend in 2009
                                                                                                                                • Direct mail and TV account for two thirds of PMI adspend
                                                                                                                                  • Figure 32: PMI adspend, by media type, 2007-09
                                                                                                                              • The Consumer – Product Ownership

                                                                                                                                • Key points
                                                                                                                                  • Note on consumer research
                                                                                                                                    • A quarter of adults have some type of health cover
                                                                                                                                        • Figure 33: Health insurance ownership, April 2010
                                                                                                                                      • Ownership peaks among 45-54-year-olds
                                                                                                                                        • Figure 34: PMI and health cash plan ownership, by age, April 2010
                                                                                                                                      • Health insurance ownership is linked to household income
                                                                                                                                        • Figure 35: PMI and health cash plan ownership, by household income, April 2010
                                                                                                                                      • A fifth of cash plan owners also have PMI
                                                                                                                                        • Figure 36: Cross-analysis of health insurance product ownership, April 2010
                                                                                                                                      • Around 5% of people have more than one type of health cover
                                                                                                                                        • Figure 37: Repertoire of health insurance ownership, April 2010
                                                                                                                                        • Figure 38: Types of healthcare cover owned, 2009
                                                                                                                                      • Most people have comprehensive healthcare policies
                                                                                                                                        • Figure 39: Conditions/treatments included in healthcare cover, 2009
                                                                                                                                    • The Consumer – Health Cash Plan Benefits

                                                                                                                                      • Key points
                                                                                                                                        • Cash plan holders have different benefit priorities than wider population
                                                                                                                                            • Figure 40: Cash plan benefit preferences – all adults and existing plan holders, April 2010
                                                                                                                                          • Scope to improve cash plan benefit awareness
                                                                                                                                            • Dental benefits have the widest appeal
                                                                                                                                              • Cash plan benefit preference differs with age
                                                                                                                                                • Figure 41: Most popular cash plan benefits, by demographics, April 2010
                                                                                                                                              • Health cash plans as a budgeting tool
                                                                                                                                                • Health cash plans as a PMI add-on
                                                                                                                                                  • Figure 42: Cash plan benefit preferences, by health insurance ownership, April 2010
                                                                                                                                              • The Consumer – Attitudes towards Healthcare and Healthcare Cover

                                                                                                                                                • Key points
                                                                                                                                                  • There is broad support for the work of the NHS
                                                                                                                                                      • Figure 43: Attitudes towards healthcare and healthcare cover, April 2010
                                                                                                                                                    • Over-65s are among the biggest supporters of the NHS
                                                                                                                                                      • Figure 44: Most popular attitudes towards healthcare and healthcare cover, by demographics, April 2010
                                                                                                                                                    • Support for the NHS does not prevent people from opting for private care
                                                                                                                                                      • Higher earners are more likely to worry about small print and exclusions
                                                                                                                                                        • Figure 45: Further attitudes towards healthcare and healthcare cover, by demographics, April 2010
                                                                                                                                                      • Individual PMI holders are less positive about the NHS
                                                                                                                                                        • Figure 46: Attitudes towards healthcare and healthcare cover, by most popular types of health insurance owned, April 2010
                                                                                                                                                      • The self-insured are more likely to be concerned about small print
                                                                                                                                                        • Figure 47: Attitudes towards healthcare and healthcare cover, by next most popular types ofhealth insurance owned, April 2010
                                                                                                                                                      • Target groups
                                                                                                                                                          • Figure 48: Healthcare cover, target groups, April 2010
                                                                                                                                                      • Appendix – The Consumer – Product Ownership

                                                                                                                                                          • Figure 49: Most popular types of health insurance owned, by demographics, April 2010
                                                                                                                                                          • Figure 50: Next most popular types of health insurance owned, by demographics, April 2010
                                                                                                                                                      • Appendix – The Consumer– Health Cash Plan Benefits

                                                                                                                                                          • Figure 51: Most popular cash plan benefits, by demographics, April 2010
                                                                                                                                                          • Figure 52: Next most popular cash plan benefits, by demographics, April 2010
                                                                                                                                                          • Figure 53: Other cash plan benefits, by demographics, April 2010
                                                                                                                                                      • Appendix – The Consumer – Attitudes towards Healthcare and Healthcare Cover

                                                                                                                                                          • Figure 54: Most popular attitudes towards healthcare and healthcare cover, by demographics, April 2010
                                                                                                                                                          • Figure 55: Next most popular attitudes towards healthcare and healthcare cover, by demographics, April 2010
                                                                                                                                                          • Figure 57: Attitudes towards healthcare and healthcare cover, by target groups, April 2010
                                                                                                                                                          • Figure 58: Types of insurance or savings have for health needs, by target groups, April 2010

                                                                                                                                                      Companies Covered

                                                                                                                                                      • Association of British Insurers
                                                                                                                                                      • Aviva Plc
                                                                                                                                                      • AXA UK plc
                                                                                                                                                      • BUPA
                                                                                                                                                      • Cancer Research UK
                                                                                                                                                      • Department of Health
                                                                                                                                                      • Exeter Friendly Society
                                                                                                                                                      • Financial Services Authority (The)
                                                                                                                                                      • Hospital Savings Association [HSA]
                                                                                                                                                      • Kantar Media
                                                                                                                                                      • Laing & Buisson
                                                                                                                                                      • Legal & General Group PLC
                                                                                                                                                      • Prudential plc
                                                                                                                                                      • Saga Services (finance)
                                                                                                                                                      • Spire Healthcare
                                                                                                                                                      • The Benenden Healthcare Society Limited
                                                                                                                                                      • The Chartered Insurance Institute

                                                                                                                                                      Health Cash Plans and Private Medical Insurance - UK - July 2010

                                                                                                                                                      £1,995.00 (Excl.Tax)