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Health Cash Plans - UK - November 2016

“There is a clear need to improve consumer awareness and understanding of health cash plans, as many people confuse them with PMI and few consider them good value for money. Only by overcoming these obstacles can providers significantly increase take-up.”
– Sarah Hitchcock, Senior Finance Analyst

This report examines the following issues:

  • Increase visibility on price comparison sites to help educate consumers
  • Develop propositions that allow employers to tailor benefits to suit the specific needs of their business

The health cash plan market in the UK is mature and stable, with little change in the market shares of the leading players from year to year. It is largely served by not-for-profit organisations, which specialise in offering cash plans and other related healthcare products.

In recent years, overall market performance has been rather uninspiring, although this disguises some variation between individual companies. The sluggish growth is mainly due to flat sales in the personal sector (ie cash plans bought independently by consumers). The corporate sector has seen growth, but this has yet to translate into a significant rise in total market value.

Nevertheless, the key market fundamentals remain sound. Demographic and lifestyle changes are putting an increasing financial strain on public health services, while NHS spending is set to slow over the next few years. These factors, along with sustained interest from employers and intermediaries, will continue to underpin demand for healthcare insurance products, including cash plans.

Mintel’s market analysis, therefore, not only looks at recent performance but also considers its prospects for future growth. Complementing this analysis are the results of our consumer research. The online survey reveals current penetration rates and examines attitudes towards the product, along with levels of consumer awareness and engagement. It also identifies the main market barriers, and offers strategies to overcome these for consideration.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Corporate sales are growing, offsetting a depressed personal market…
              • Figure 1: Forecast of health cash plan gross earned premiums, at current prices – fan chart, 2011-21
            • …but there remains good expansion potential
              • The healthcare insurance market is likely to benefit from the NHS coming under ever-increasing financial pressure
                • Companies and brands
                  • One brand dominates
                    • Figure 2: Estimated market shares of the top 10 health cash plan providers, based on GWP, 2015
                  • A low-margin product
                    • Increased focus on the corporate sector
                      • The consumer
                        • Growth in take-up driven by corporate sector
                          • Figure 3: Ownership of health cash plans and related insurance products, August 2016
                        • Cover is more likely to be held by the under-45s
                          • Around half of customers have a joint or family policy
                            • Most people would look online for information on health cash plans
                              • Figure 4: Sources most likely to use for information on health cash plans, by existing HCP holders and non-holders, August 2016
                            • Personal plan holders favour seeking information from a bank or building society
                              • There are four main reasons why people don’t own the product
                                • Figure 5: Reasons for not having a health cash plan, August 2016
                              • Customers and non-customers are attracted by different plan benefits
                                • Figure 6: HCP benefits most interested in (top eight only), August 2016
                              • Good potential to expand the market via consumer education
                                • Figure 7: Agreement with (selected) attitudinal statements about health cash plans, August 2016
                              • What we think
                              • Issues and Insights

                                • Increase visibility on price comparison sites to help educate consumers
                                  • The facts
                                    • The implications
                                      • Develop propositions that allow employers to tailor benefits to suit the specific needs of their business
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Sluggish growth forecast…
                                              • …but there’s scope to outperform expectations
                                                • Good underlying demand for low-cost health cover
                                                • Market Size and Forecast

                                                  • Total market premiums have barely grown over the past three years
                                                    • Figure 8: Value of health cash plan market, by gross written premiums, 2011-15
                                                  • Sector analysis
                                                    • Stable claims ratio
                                                      • Market forecast
                                                        • The market will continue to struggle to achieve real-term growth
                                                          • Figure 9: Forecast of health cash plan gross earned premiums, at current prices – fan chart, 2011-21
                                                          • Figure 10: Forecast of health cash plan gross earned premiums, at current and constant prices, 2016-21
                                                        • Forecast methodology
                                                        • Market Drivers

                                                          • Health cash plans offer more than vision-only and dental-only plans
                                                            • Most adults pay towards their dental treatment
                                                              • Figure 11: Number of adult patients seen in the previous 24 months, child patients seen in the previous 12 months and the percentage of the population seen at specified dates – England, 2006-16
                                                            • Weighing up the costs
                                                                • Figure 12: Cost of NHS dental treatment in England, 2010/11-2016/17
                                                              • Two thirds of UK adults wear specs
                                                                • Rising prescription charges
                                                                  • Reduced NHS investment going forward
                                                                    • Figure 13: NHS net expenditure in real terms, 2011/12-2019/20
                                                                  • The latest IPT increase will have minimal impact…
                                                                    • Figure 14: Changes to the standard rate of IPT, 2011-16
                                                                  • …but there remains the threat of further hikes
                                                                    • Brexit has created economic uncertainty, which could undermine future growth in the corporate sector
                                                                    • Companies and Brands – What You Need to Know

                                                                      • A fairly consolidated market, dominated by one brand
                                                                        • Providers continually tweak propositions to demonstrate value for money…
                                                                          • …and give greater focus to the corporate sector
                                                                          • Market Share

                                                                            • Simplyhealth is the largest provider, by a significant margin
                                                                                • Figure 15: Top 10 health cash plan providers, by GWP, 2011-15
                                                                              • Little movement in market share over the past five years
                                                                                • Figure 16: Estimated market shares of the top 10 health cash plan providers, based on GWP, 2011-15
                                                                            • Competitive Strategies

                                                                              • Provider activity
                                                                                • New entrant offers special promotion to boost its share of the market
                                                                                  • Benenden and Bupa establish partnership
                                                                                    • Simplyhealth’s PMI disposal
                                                                                      • Product innovation and technological developments
                                                                                        • Responding to changing employer needs
                                                                                          • Digital developments
                                                                                            • Simplyhealth launches Everyday Health Plan for flexible benefits market…
                                                                                              • …and expands social media presence
                                                                                                • Healthcare insurers link up with wearable technology providers
                                                                                                  • Health Shield launches interactive website
                                                                                                    • Westfield Health partners with Untangl to target the SME market
                                                                                                    • Advertising and Marketing Activity

                                                                                                      • Little industry investment in above-the-line advertising
                                                                                                        • Figure 17: Top 12 advertisers of above-the-line, online display and direct mail advertising expenditure on healthcare insurance and related products, 2014-16
                                                                                                      • Nielsen Ad Intel coverage
                                                                                                      • The Consumer – What You Need to Know

                                                                                                        • Growth in take-up driven by corporate sector
                                                                                                          • Around half of all cash plans provide joint or family cover
                                                                                                            • Most people would look online for product information
                                                                                                              • Lack of interest and affordability are the top reasons for not having a health cash plan
                                                                                                                • Customers and non-customers are attracted by different plan benefits
                                                                                                                  • Good potential to expand the market by educating consumers
                                                                                                                  • Consumer Product Ownership

                                                                                                                    • 11% of UK adult internet users have a health cash plan
                                                                                                                        • Figure 18: Ownership of health cash plans and related insurance products, August 2016
                                                                                                                      • Under-45s much more likely to have a health cash plan
                                                                                                                        • Scope to improve take-up by 45-64s
                                                                                                                          • Significant product crossover
                                                                                                                              • Figure 19: Ownership of health cash plans and related insurance products – by HCP holders and non-holders, August 2016
                                                                                                                            • Joint and family policies are common
                                                                                                                                • Figure 20: People covered by policy, August 2016
                                                                                                                            • Preferred Sources of Product Information

                                                                                                                              • Most people would search online for information on health cash plans…
                                                                                                                                • …and yet most comparison sites do not include them as a separate product category
                                                                                                                                  • Figure 21: Sources most likely to use for information on health cash plans, by existing HCP holders and non-holders, August 2016
                                                                                                                                • 24% of personal plan holders would go to a bank or building society for information
                                                                                                                                  • Figure 22: Sources most likely to use for information on health cash plans, by corporate and personal HCP holders, August 2016
                                                                                                                              • Market Barriers

                                                                                                                                • There are four main barriers to take-up
                                                                                                                                  • Figure 23: Reasons for not having a health cash plan, August 2016
                                                                                                                                • 45% cite a lack of affordability
                                                                                                                                • Most Appealing Benefits

                                                                                                                                  • Cashback on dental bills is top attraction
                                                                                                                                    • Figure 24: HCP benefits most interested in, August 2016
                                                                                                                                  • Less interest in gym discounts and online health assessments
                                                                                                                                    • Significant variation in interest levels according to age and gender
                                                                                                                                    • Attitudes towards and Understanding of the Product

                                                                                                                                      • 53% of respondents express interest in a modular-type product…
                                                                                                                                        • …while 45% are in favour of budgeting for everyday medical expenses
                                                                                                                                          • Figure 25: Agreement with attitudinal statements about health cash plans, August 2016
                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                          • Abbreviations
                                                                                                                                            • Consumer research methodology
                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                              • Market forecast – best- and worst-case scenarios
                                                                                                                                                • Figure 26: Forecast of HCP gross written premiums – best- and worst-case scenarios, at current prices, 2016-21
                                                                                                                                              • Forecast methodology

                                                                                                                                              Companies Covered

                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                              Health Cash Plans - UK - November 2016

                                                                                                                                              US $2,672.70 (Excl.Tax)