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Health Cash Plans - UK - October 2014

“Mintel’s research shows that just 7% of non-HCP owners said that they had never heard of the product. This represents an excellent level of product awareness, but the opinions about premiums suggest that insurers are failing to either get their price message across, or to make full use of their low cost in marketing the plans.”

– Rich Shepherd, Research Analyst – Financial Services

This report discusses to following key topics:

  • Insurers have got prices right but are failing to get the message across
  • Covering prescriptions can help define HCPs position in the market

The health cash plan (HCP) market has experienced a difficult period in the last decade. The number of plans sold, the number of people covered by HCPs, and the value of premiums have all fallen since the start of the recession. In 2013, however, the market returned to modest growth in volume terms, and recorded the second successive annual growth by value as consumers started to feel the first benefits of the economic recovery.

Health cash plan providers are currently operating at near-record margins due to falling claims costs in recent years. However, because of squeezed budgets and the resistance of many consumers to return to pre-recession spending habits, insurers are struggling to return ownership of HCPs to the kind of numbers seen in the 1990s.

This report examines the HCP market as a whole. It looks at the main internal and external market drivers affecting HCP providers. The report includes an analysis of the market size, with a forecast for the next five years, and discusses the main market players. There is a discussion of recent market innovations, a SWOT analysis, and analysis of the channels to market, including the role of intermediaries. Finally the report includes Mintel’s exclusive consumer research. This starts by looking at ownership of health insurance policies, and other means of paying for medical costs. The research then looks at the ways people researched their HCPs, why people don’t have an HCP, and which features consumers would like to see included in plans. The report also examines the usage of routine and non-routine medical services.

Health cash plans are insurance policies that are designed to provide assistance with day-to-day costs that can be incurred because of healthcare needs. They differ from private medical healthcare in that policyholders are not covered for specific illnesses. Rather, HCPs provide payments for treatments such as dental and optical treatment, and help cover costs for time spent in hospital. Many HCP providers now include benefits such as health advice tools like helplines and online portals, and partnerships with gyms and health centres, to help customers improve their health.

Health cash plans can be arranged either individually or by companies on behalf of their employees. They are either individual-paid, which includes individual plans and corporate ones where the employees pay their own premiums, or company-paid, where the employer pays all premiums.

 

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Table of contents

  1. Introduction

    • Report scope
      • Market definition
        • Abbreviations
        • Executive Summary

            • The market
              • Health cash plans expected to enjoy sustained growth in next five years
                • Figure 1: Forecast of value of health cash plan annual premiums, 2009-19
              • Market factors
                • The economy is improving but consumers are still cautious spenders
                  • The price difference between HCPs and PMI remains stark
                    • Low claims costs have kept providers’ margins high despite the downturn
                      • Companies, products and innovations
                        • Simplyhealth is the dominant player in the HCP market
                          • Figure 2: Top five HCP providers, by income, 2013
                        • Brand promotion
                          • The consumer
                            • A fifth have health insurance, but just 6% have an HCP
                              • Figure 3: Health insurance ownership, August 2014
                            • A third of cash plan or dental/optical plan customers researched their plan online
                              • Figure 4: Sources of research for health cash plan and/or dental or optical plan policies, August 2014
                            • Perceived cost is the biggest barrier to HCP ownership
                              • Figure 5: Barriers to ownership of health cash plans, August 2014
                            • Dental treatment is the most popular HCP benefit
                              • Figure 6: Desired features of health cash plans, August 2014
                            • Experience of medical services
                              • Figure 7: Experience of routine medical services in the last 2 years, August 2014
                              • Figure 8: Personal and immediate family’s experience of non-routine medical services, August 2014
                            • What we think
                            • Issues and Insights

                                • Insurers have got prices right but are failing to get the message across
                                  • The facts
                                    • The implications
                                      • Covering prescriptions can help define HCPs position in the market
                                        • The facts
                                          • The implications
                                          • Trend Application

                                            • Smartphone apps can improve usability and increase engagement
                                              • Make plans more relevant by offering tailored benefit packages
                                                • Personal expert opinion still beats online guidance
                                                • Market Drivers

                                                  • Key points
                                                    • Slump in company-paid premiums is stifling growth…
                                                      • Figure 9: Average annual premiums for HCPs, 2004-2013
                                                    • …but low cost of HCPs is favourable in face of rising PMI premiums
                                                      • Figure 10: Average annual premiums for PMI, 2003-13
                                                    • Costs of NHS services is a concern for many
                                                      • Figure 11: Cost of NHS prescriptions and dental treatment in England, 2010-14
                                                    • Sustained improvement in employment figures…
                                                      • Figure 12: UK employment rate for people aged 16-64, January 2008 – July 2014
                                                      • Figure 13: Number of people aged 16+ in full-time employment, August 2013 – July 2014
                                                    • Cost of claims remains low compared to historic average…
                                                      • Figure 14: Total benefits paid to HCP policyholders, 2007-13
                                                    • …so margins have stayed high
                                                      • Figure 15: Gross percentage margin of HCPs, 2007-13
                                                  • SWOT Analysis

                                                      • Figure 16: SWOT analysis of the health cash plan market, September 2014
                                                  • Who’s Innovating?

                                                    • Key points
                                                      • Bupa now accepts online claims
                                                        • Westfield broadens its health club discounts
                                                          • Health Shield adds home assistance benefit
                                                            • First Assist (Cigna Insurance) launches surgery cash plan
                                                            • Market Size and Forecast

                                                              • Key points
                                                                • Modest growth in HCP premiums
                                                                  • Figure 17: Volume of HCP contributors and people covered, and value of HCP premiums, 2007-14
                                                                • Company contributions continue to rise
                                                                  • Figure 18: HCP market segmentation, individual contributors vs corporate contributors, 2007-13
                                                                • Market forecast
                                                                  • Volume of health cash plans expected to grow by 8% by 2019…
                                                                    • Figure 19: Forecast of volume of health cash plans in force, 2009-19
                                                                    • Figure 20: Forecast of volume of health cash plans in force, 2009-2019
                                                                  • …and the value of premiums is expected to rise by 11%
                                                                    • Figure 21: Forecast of value of health cash plan annual premiums, 2009-19
                                                                    • Figure 22: Forecast of value of health cash plan annual premiums, 2009-19
                                                                  • Forecast methodology
                                                                    • Fan chart explanation
                                                                    • Market Share

                                                                      • Key points
                                                                        • Simplyhealth dominates the health cash plan market
                                                                          • Figure 23: Health cash plan market share, by income, 2013
                                                                        • Little change in the last five years
                                                                          • Figure 24: Health cash plan market share, by income, 2009-13
                                                                      • Companies and Products

                                                                        • Simplyhealth
                                                                          • Company description
                                                                            • Product range
                                                                              • Financial performance
                                                                                • Recent activity
                                                                                  • Westfield Health
                                                                                    • Company description
                                                                                      • Product range
                                                                                        • Financial performance
                                                                                          • Recent activity
                                                                                            • BHSF Group
                                                                                              • Company description
                                                                                                • Product range
                                                                                                  • Financial performance
                                                                                                    • Recent activity
                                                                                                      • Health Shield
                                                                                                        • Company description
                                                                                                          • Product range
                                                                                                            • Financial performance
                                                                                                              • Recent activity
                                                                                                                • HSF Health Plan
                                                                                                                  • Company description
                                                                                                                    • Product range
                                                                                                                      • Financial performance
                                                                                                                        • Recent activity
                                                                                                                          • Medicash
                                                                                                                            • Company description
                                                                                                                              • Product range
                                                                                                                                • Financial performance
                                                                                                                                  • Recent activity
                                                                                                                                  • Brand Communication and Promotion

                                                                                                                                    • Key points
                                                                                                                                      • Industry adspend still below 2012 levels
                                                                                                                                        • Figure 25: Total adspend by health insurance providers, 2012-14
                                                                                                                                      • AXA is the biggest-spending advertiser in health insurance
                                                                                                                                        • Figure 26: Top ten advertisers in health insurance, 2012-13
                                                                                                                                      • Benenden trials personalised television advertising
                                                                                                                                      • Channels to Market

                                                                                                                                        • Key points
                                                                                                                                          • Most policies are non-intermediated…
                                                                                                                                            • Figure 27: Proportion of health cash plan sales, by sales channel, 2009-13
                                                                                                                                          • …but adviser activity is growing in corporate business
                                                                                                                                          • Health Insurance Ownership

                                                                                                                                            • Key points
                                                                                                                                              • Over a fifth have health insurance
                                                                                                                                                • Figure 28: Health insurance ownership, August 2014
                                                                                                                                              • Two thirds have no cover or savings for medical expenses
                                                                                                                                                • Lower-earners are least likely to have an HCP
                                                                                                                                                  • Figure 29: Ownership of health cash plans vs those with no health provisions, by household income, August 2014
                                                                                                                                                • Parents of young children are most likely to have an HCP
                                                                                                                                                  • Figure 30: Ownership of health cash plans, by age of dependent children, August 2014
                                                                                                                                              • Health Cash Plan Research

                                                                                                                                                • Key points
                                                                                                                                                  • A third of cash plan policyholders researched online
                                                                                                                                                    • Figure 31: Sources of research for health cash plan and/or dental or optical plan policies, August 2014
                                                                                                                                                  • Employers are more prominent in HCP research than other policies
                                                                                                                                                    • Figure 32: Sources of research for health cash plan and/or dental or optical plan policies, by health insurance ownership, August 2014
                                                                                                                                                  • Men are more engaged in researching plans
                                                                                                                                                    • Figure 33: Sources of research for health cash plan and/or dental or optical plan policies, males vs females, August 2014
                                                                                                                                                • Barriers to Ownership

                                                                                                                                                  • Key points
                                                                                                                                                    • Cost is the biggest barrier to HCP ownership
                                                                                                                                                      • Figure 34: Barriers to ownership of health cash plans, August 2014
                                                                                                                                                    • Those in poor health are most likely to find HCPs too expensive
                                                                                                                                                      • Figure 35: Selected barriers to ownership of HCPs, by description of personal health, August 2014
                                                                                                                                                    • Creating a differentiated approach to HCP marketing
                                                                                                                                                      • Lack of trust in insurers makes it harder to see value in HCPs
                                                                                                                                                        • Increasing awareness among younger consumers could boost sales
                                                                                                                                                          • Figure 36: Awareness and understanding of HCPs, by age, August 2014
                                                                                                                                                      • Desired Features of Health Cash Plans

                                                                                                                                                        • Key points
                                                                                                                                                          • Dental treatment is the top priority
                                                                                                                                                            • Figure 37: Desired features of health cash plans, August 2014
                                                                                                                                                          • Features that cater for all?
                                                                                                                                                            • Could smaller HCPs cater for the economy market?
                                                                                                                                                              • Figure 38: top five most popular features of HCPs among consumers who can’t afford an HCP, vs all, August 2014
                                                                                                                                                            • HCP policyholders are much more engaged in the benefits that they want
                                                                                                                                                              • Figure 39: Desired features of health cash plans, by HCP ownership, August 2014
                                                                                                                                                            • Parents of young children are more interested in guidance services
                                                                                                                                                              • Figure 40: Selected desired features of HCPs, by age of respondent’s children living at home, August 2014
                                                                                                                                                          • Experience of Medical Services

                                                                                                                                                            • Key points
                                                                                                                                                              • GPs are the most used medical service
                                                                                                                                                                • Figure 41: Experience of routine medical services in the last 2 years, August 2014
                                                                                                                                                              • Use of any service increases ownership and engagement
                                                                                                                                                                • Figure 42: Experience of routine medical services, by health insurance product ownership and desired features of HCPs, August 2014
                                                                                                                                                              • Women use routine services more than men
                                                                                                                                                                • Figure 43: Experience of routine medical services in the last 2 years, by gender, August 2014
                                                                                                                                                              • Nearly half of all people have stayed overnight in a hospital…
                                                                                                                                                                • Figure 44: Personal experience of non-routine medical services, August 2014
                                                                                                                                                                • Figure 45: Family members’ experiences of non-routine medical services, August 2014
                                                                                                                                                              • …but non-routine treatment is not a greater trigger for HCP purchases
                                                                                                                                                                • Figure 46: HCP ownership by personal experience of routine and non-routine medical services (five most common of each), August 2014
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Volume
                                                                                                                                                                • Figure 47: Best- and worst-case forecast of the volume of health cash plans in force, 2014-19
                                                                                                                                                              • Value
                                                                                                                                                                • Figure 48: Best- and worst-case forecast of the value of health cash plan annual premiums, 2014-19

                                                                                                                                                            Companies Covered

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

                                                                                                                                                            Health Cash Plans - UK - October 2014

                                                                                                                                                            £1,995.00 (Excl.Tax)