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Private Medical Insurance - UK - October 2017

“While the corporate market has advanced, personal contracts have lost ground as prices have continued to rise. Expanding the market will remain an uphill battle in the current economic environment and as some potential customers consider topping up NHS services with private self-pay. Older Millennials represent a key target group for those insurers able to deliver best-in-class digital services.”

- Patrick Ross, Senior Financial Services Analyst

This report will look at the following areas:

  • Older Millennials have big potential as a target market
  • GP 2.0: the battle to perfect primary care
  • Impact of mental health conditions could increase interest in cover

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Table of contents

  1. Overview

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

            • The market
              • Gross earned premiums will inch upwards over the next five years
                • Figure 1: Forecast of PMI gross earned premiums, at current prices – Fan chart, 2012-22
              • Corporate premiums are propping up the market
                • Figure 2: Gross earned premiums, by segment, 2011-16
              • Claims costs are shaped by ongoing innovation
                • Figure 3: PMI claims amount incurred and claims ratio, by sector, 2011-16
              • Increasing IPT has added to price inflation woes
                • The economic environment offers little support to PMI sales
                  • Companies and brands
                    • Bupa takes the top spot by customer share
                      • Figure 4: Private healthcare insurance provider, April 2017
                    • Medical technology, GP access, and mental health are key strategies
                      • TV advertising drops off in 2017
                        • Newer brands struggle to stand out from the crowd
                          • The consumer
                            • Similar levels of ownership of PMI and health cash plans
                              • Figure 5: Health insurance product ownership, August 2017
                            • A quarter of PMI holders have made a claim in the last two years
                              • Figure 6: Private medical insurance-related activities, August 2017
                            • 63% of PMI holders say they understand exactly what’s covered
                              • Figure 7: Attitudes and experiences of the insureds, August 2017
                            • Only 6% of non-policyholders say they can afford health insurance
                              • Figure 8: Perceptions of affordability, August 2017
                            • Key high frequency services draw strongest limited cover interest
                              • Figure 9: Interest in limited cover policies, August 2017
                            • Almost a third of the non-insured would avoid NHS wait through private self-pay
                              • Figure 10: Approaches to self-pay treatment, August 2017
                            • GP service quality tops list of NHS priorities
                              • Figure 11: NHS services under scrutiny: quality or access, August 2017
                            • Sentiment towards the NHS has worsened over the past year
                              • Figure 12: NHS services under scrutiny: five-year outlook, August 2016-August 2017
                            • What we think
                            • Issues and Insights

                              • Older Millennials have big potential as a target market
                                • The facts
                                  • The implications
                                    • GP 2.0: the battle to perfect primary care
                                      • The facts
                                        • The implications
                                          • Impact of mental health conditions could increase interest in cover
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • The economic environment offers little support to PMI sales
                                                  • Gross earned premiums are expected to inch upwards over the next five years
                                                    • Corporate coverage expands while personal coverage shrinks
                                                      • Claims costs are shaped by ongoing innovation
                                                        • Increasing IPT has added to price inflation woes
                                                        • Market Size and Forecast

                                                          • The number of people covered by PMI has continued to expand …
                                                            • Figure 13: Number of PMI subscribers and people covered, 2011-16
                                                          • … and gross earned premiums have grown steadily
                                                            • Figure 14: PMI gross earned premiums, 2011-16
                                                          • Gross earned premiums will inch upwards over the next five years
                                                            • Figure 15: Forecast of PMI gross earned premiums, at current prices – Fan chart, 2012-22
                                                            • Figure 16: Market size and forecast for PMI gross earned premiums, at current and constant prices, 2012-22
                                                          • Forecast methodology
                                                          • Market Segmentation

                                                              • Corporate premiums are propping up the market …
                                                                • Figure 17: Gross earned premiums, by segment, 2011-16
                                                              • … and corporate coverage expands while personal coverage shrinks
                                                                • Figure 18: Number of people covered and number of subscribers, by segment, 2011-16
                                                              • Average premium rises have proved prohibitive
                                                                • Figure 19: Average PMI premium, by segment, 2006-16
                                                            • Market Drivers

                                                              • Flat disposable income limits propensity to spend on PMI
                                                                • Figure 20: GDP per head and real household disposable income per head, seasonally adjusted, Q2 2013-Q1 2017
                                                              • Falling unemployment supports the market
                                                                • Figure 21: UK unemployment rate, aged 16 and over, seasonally adjusted, January 2012-May 2017
                                                              • Government spending on health dwarfs private spending …
                                                                • Figure 22: Current healthcare expenditure, by source, 2013-15
                                                              • … but the government plans to slow growth in spending
                                                                • Figure 23: Department of Health budget, real terms, 2017/18 prices, 2009/10-2020/21
                                                              • Demand for NHS diagnostic services tells through waiting times
                                                                • Figure 24: Total number of NHS England patients waiting for diagnostic tests, January 2012-July 2017
                                                                • Figure 25: Number of 6+ and 10+ week waits for diagnostic tests, NHS England patients, January 2012-July 2017
                                                              • Research finds 15-25% year-on-year rises in number of self-pay patients
                                                              • Claims Performance

                                                                • Claims costs are shaped by ongoing innovation
                                                                  • Figure 26: PMI claims amount incurred and claims ratio, by sector, 2011-16
                                                              • Regulatory and Legislative Changes

                                                                • IPT increases have contributed to price pains …
                                                                  • Figure 27: Insurance Premium Tax (IPT) rates, September 2017
                                                                • … and increased the appeal of healthcare trusts for employers
                                                                  • CMA demands quality information from seven hospitals
                                                                    • Concerns about impact of ‘shopping around’ rules
                                                                      • ABI launches Health Insurance Guide
                                                                      • Companies and Brands – What You Need to Know

                                                                        • Bupa takes the top spot by customer share
                                                                          • Medical technology, GP access, and mental health are key strategies
                                                                            • Bupa retains adspend top spot
                                                                              • Newer brands struggle to stand out from the crowd
                                                                              • Market Share

                                                                                • Bupa takes the top spot by customer share
                                                                                  • Figure 28: Private healthcare insurance provider, April 2017
                                                                              • Competitive Strategies

                                                                                • Tackling mental health
                                                                                  • Bupa launches guide for line managers supporting staff
                                                                                    • AXA PPP makes BioBeats stress management app available to customers
                                                                                      • Providers target improved GP access
                                                                                        • National Friendly launches private GP access plan
                                                                                          • Doctaly offers private GP appointment from £39.99
                                                                                            • Insurers invest in latest medical technology
                                                                                              • Aviva invests in medical diagnostics company
                                                                                                • AXA PPP teams up with non-profit ukactive for fit-tech accelerator
                                                                                                • Advertising and Marketing Activity

                                                                                                  • Bupa retains adspend top spot
                                                                                                    • Figure 29: Above-the line, online display and direct mail advertising expenditure on private healthcare insurance, by advertiser, 2015-17*
                                                                                                  • TV advertising drops off in 2017
                                                                                                    • Figure 30: Above-the line, online display and direct mail advertising expenditure on private healthcare insurance, by media type, 2017
                                                                                                    • Figure 31: Above-the line, online display and direct mail advertising expenditure on private healthcare insurance, by media type, 2015-2017*
                                                                                                  • Search and social advertising is highly competitive
                                                                                                    • Nielsen Ad Intel coverage
                                                                                                    • Brand Research

                                                                                                        • Brand map
                                                                                                          • Figure 32: Attitudes towards and usage of selected brands, August 2017
                                                                                                        • Key brand metrics
                                                                                                          • Figure 33: Key metrics for selected brands, August 2017
                                                                                                        • Brand attitudes: AXA and Aviva rely on brand presence in other insurance markets
                                                                                                          • Figure 34: Attitudes, by brand, August 2017
                                                                                                        • Brand personality: VitalityHealth stands out as fun and vibrant
                                                                                                          • Figure 35: Brand personality – Macro image, August 2017
                                                                                                        • Bupa’s brand stands alone in private healthcare
                                                                                                          • Figure 36: Brand personality – Micro image, August 2017
                                                                                                        • Brand analysis
                                                                                                          • Bupa’s brand is synonymous with British private healthcare
                                                                                                            • Figure 37: User profile of Bupa, August 2017
                                                                                                          • Simplyhealth struggles to stand out from the crowd
                                                                                                            • Figure 38: User profile of Simplyhealth, August 2017
                                                                                                          • AXA relies on key traits earned from other general insurance markets
                                                                                                            • Figure 39: User profile of AXA, August 2017
                                                                                                          • Aviva thrives on reputation for trust and fairness
                                                                                                            • Figure 40: User profile of Aviva, August 2017
                                                                                                          • VitalityHealth solidifies brand recognition following 2014 rebrand
                                                                                                            • Figure 41: User profile of brand, August 2017
                                                                                                        • The Consumer – What You Need to Know

                                                                                                          • Similar levels of ownership of PMI and health cash plans
                                                                                                            • A quarter of PMI holders have made a claim in the last two years
                                                                                                              • 64% of PMI holders are confident in the services provided
                                                                                                                • Only 6% of non-policyholders say they can afford health insurance
                                                                                                                  • Key high frequency services draw strongest limited cover interest
                                                                                                                    • Almost a third of the non-insured would avoid NHS wait through private self-pay
                                                                                                                      • GP service quality tops list of NHS priorities
                                                                                                                        • Sentiment towards the NHS has worsened over the past year
                                                                                                                        • Health Insurance Product Ownership

                                                                                                                          • Similar levels of ownership for PMI and health cash plans
                                                                                                                            • Fewer than one in 10 have a condition- or treatment-specific policy
                                                                                                                              • Figure 42: Health insurance product ownership, August 2017
                                                                                                                            • PMI is more likely to be arranged through an employer than other products
                                                                                                                              • Figure 43: Health insurance product ownership, by arrangement method, August 2017
                                                                                                                          • PMI-related Activities

                                                                                                                            • A quarter of PMI holders have made a claim in the last two years
                                                                                                                              • PMI holders are more likely to have expanded cover in the last two years
                                                                                                                                • Figure 44: Private medical insurance-related activities, August 2017
                                                                                                                              • Men far more likely to have increased cover than women
                                                                                                                                • Figure 45: Private medical insurance-related activities, August 2017
                                                                                                                              • Older customers tend to be less engaged
                                                                                                                                • Figure 46: Private medical insurance-related activities, August 2017
                                                                                                                              • Rewards help improve engagement with PMI products
                                                                                                                                • Figure 47: Private medical insurance-related activities, by reward recipients, August 2017
                                                                                                                            • Attitudes and Experiences of PMI Holders

                                                                                                                              • 63% of PMI holders say they understand exactly what’s covered …
                                                                                                                                • … and 64% are confident in the services provided
                                                                                                                                  • Figure 48: Attitudes and experiences of the insureds, August 2017
                                                                                                                                • Virtual GP services begin to gather momentum
                                                                                                                                  • Figure 49: Experiences with virtual GPs, August 2017
                                                                                                                                • Older people more likely to say they understand the extent of their cover
                                                                                                                                  • Virtual GPs are reaching almost half of 16-44s
                                                                                                                                    • Figure 50: Attitudes and experiences of the insureds, August 2017
                                                                                                                                • Perceptions of Affordability

                                                                                                                                  • Only 6% of non-policyholders say they can afford health insurance
                                                                                                                                    • Figure 51: Perceptions of affordability, August 2017
                                                                                                                                  • Older Millennials could be open to taking out PMI
                                                                                                                                    • Figure 52: Perceptions of affordability, by generation, August 2017
                                                                                                                                • Interest in Limited Cover Policies

                                                                                                                                  • Key high frequency services draw strongest consideration
                                                                                                                                    • Figure 53: Interest in limited cover policies, August 2017
                                                                                                                                  • Older Millennials show potential for limited or modular policies
                                                                                                                                    • Figure 54: Interest in limited cover policies, by generation, August 2017
                                                                                                                                  • 14% would consider three or more limited cover policies
                                                                                                                                    • Figure 55: Number of limited policies considered, August 2017
                                                                                                                                    • Figure 56: Interest in limited cover policies, by number of limited policies considered, August 2017
                                                                                                                                  • Access to GP services and hospital admission could tempt cost-conscious
                                                                                                                                    • Figure 57: Interest in limited cover policies, by perceptions of affordability, August 2017
                                                                                                                                • Approaches to Self-pay Treatment

                                                                                                                                  • Almost a third of non-insured would avoid NHS wait through private self-pay
                                                                                                                                    • Some favour cure over prevention
                                                                                                                                      • Figure 58: Approaches to self-pay treatment, August 2017
                                                                                                                                    • 35-44s most likely to self-pay to avoid the waiting list
                                                                                                                                      • Figure 59: Approaches to self-pay treatment, by age, August 2017
                                                                                                                                    • Almost half of potential PMI customers say they would self-pay
                                                                                                                                      • Figure 60: Approaches to self-pay treatment, by perceptions of affordability, August 2017
                                                                                                                                  • NHS Services under Scrutiny: Quality or Access?

                                                                                                                                    • GP service quality tops list of NHS priorities
                                                                                                                                      • Figure 61: NHS services under scrutiny: quality or access, August 2017
                                                                                                                                    • Existing PMI holders prioritise access
                                                                                                                                      • Figure 62: NHS services under scrutiny: quality or access, by health insurance product ownership, August 2017
                                                                                                                                    • A mix of access and quality factors remains important as people age
                                                                                                                                      • Figure 63: NHS services under scrutiny: quality or access, by generation, August 2017
                                                                                                                                  • NHS Services under Scrutiny: Five-year Outlook

                                                                                                                                    • Sentiment towards the NHS has worsened over the past year
                                                                                                                                      • Responding to the stresses and strains
                                                                                                                                        • Figure 64: NHS services under scrutiny: five-year outlook, August 2016-August 2017
                                                                                                                                      • Baby Boomers most likely to have poor outlook for the NHS
                                                                                                                                        • Figure 65: NHS services under scrutiny: five-year outlook, August 2017
                                                                                                                                      • PMI holders far more confident about NHS prospects than non-holders
                                                                                                                                        • Figure 66: NHS services under scrutiny: five-year outlook, by health insurance product ownership, August 2017
                                                                                                                                      • Non-holders who could afford PMI are more likely to feel positive about the NHS
                                                                                                                                        • Figure 67: NHS services under scrutiny: five-year outlook, by perceptions of affordability, August 2017
                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                                            • Total market forecast – Best- and worst-case scenarios
                                                                                                                                              • Figure 68: Forecast of PMI gross earned premiums, at current and constant prices, 2017-22
                                                                                                                                            • Corporate sector forecast
                                                                                                                                              • Figure 69: Forecast of corporate PMI gross earned premiums – Fan chart, 2012-22
                                                                                                                                              • Figure 70: Forecast of corporate PMI premiums – Best- and worst-case scenarios, at current prices, 2017-22
                                                                                                                                            • Personal sector forecast
                                                                                                                                              • Figure 71: Forecast of personal PMI gross earned premiums – Fan chart, 2012-22
                                                                                                                                              • Figure 72: Forecast of personal PMI premiums – Best- and worst-case scenarios, at current prices, 2017-22
                                                                                                                                            • Forecast methodology

                                                                                                                                            Companies Covered

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

                                                                                                                                            Private Medical Insurance - UK - October 2017

                                                                                                                                            US $2,648.76 (Excl.Tax)