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Consumers and Health Insurance (PMI and HCPs) Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Consumers and Health Insurance (PMI and HCPs) market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Health cash plan – provides cash benefits to cover the costs of primary care treatment, expenses associated with hospital treatment (though not the treatment itself) and post-operative care. The majority of plans do not cover the full cost, but pay a set amount or a fixed rate, usually between 50% and 75%. Plans may also include occupational health, wellness services and telephone helplines. Unlike PMI, health cash plans work on the basis of ‘guaranteed acceptance’, meaning that subscribers are not required to undergo a medical examination. However, most plans do not cover pre-existing conditions. Premiums are not agerelated, but most plans have an upper age limit of 65 or 70.

Private medical insurance – designed to cover the costs of private treatment for what are commonly known as acute medical/ surgical conditions (ie curable, short-term illnesses or injuries). The main advantage of having this cover is that it ensures prompt access to treatment should the policyholder become ill or injured. Policies are either fully underwritten (requiring the policyholder to disclose their full medical history) or written on a moratorium basis (the policyholder needs to give more limited information and the policy excludes pre-existing conditions, whether or not diagnosed).

Condition-specific policy – covers the cost of private treatment for a specified condition or small number of conditions, typically cancer and heart disease.

Treatment-only policy – covers the cost of private treatment and aftercare following an initial diagnosis on the NHS.

Treatment specific policy – this differs from the above in that it is designed to cover the cost of certain specified treatments, such as physiotherapy, psychiatry and alternative therapy.

Diagnostic-only policy – a lower-cost policy, which is designed to cover the cost of the initial consultation/diagnosis, including diagnostic tests (eg MRI, CT, PET scan).

International health insurance – designed to cover the insured for essential hospital treatment while living or working abroad. This is also referred to as IPMI (international private medical insurance).

Dental plan – an insurance policy that covers the policyholder for a maximum number of examinations and treatments at any dentist, and for emergency treatment up to a set amount per year. These differ from capitation plans, where the individual has a contract with a specific dentist to provide routine care or maintenance. Capitation plans, therefore, do not fall under the category of “medical expenses insurance”.

What you need to know

The UK health insurance industry is mature, stable and experiencing limited growth. Such are the pressures on customer affordability that maintaining – let alone growing – levels of take-up is a constant challenge. For more than a decade, falling numbers of individual customers has been a recurring theme in both in the PMI (private medical insurance) and HCP (health cash plan) markets. This is mainly linked to rising medical expenses inflation and, more recently, increases in IPT (insurance premium tax), which has driven up premiums and squeezed providers’ margins.

Expert analysis from a specialist in the field

Written by Sarah Hitchcock, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Conditions are tough in the UK private health insurance market, with affordability putting pressure on customer numbers and Brexit creating a more cautious corporate climate. Providers are rightly focussed on customer retention and controlling costs in order to maintain profitability. Sarah Hitchcock
Senior Financial Services Analyst

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Table of contents

  1. Overview

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

          • The market
            • The health insurance market is mature and stable
              • Static premium income
                • Figure 1: Medical expenses insurance gross written premiums, 2016-19
              • Health insurers’ margins squeezed by rising medical inflation
                • NHS feeling the strain
                  • Average PMI premiums boosted by IPT rises
                    • Companies and brands
                      • A heavily consolidated market
                        • Figure 2: Top six providers’ estimated share of medical expenses insurance GWP (UK only), 2017
                      • Technology drives new innovation
                        • Insurers give greater focus to mental health
                          • The consumer
                            • Although much cheaper, cash plans have a lower take-up rate than PMI
                              • Figure 3: Ownership of health insurance, health cash plans and related products, August 2018
                            • Claims experience
                              • Both the PMI and HCP markets enjoy fairly high levels of customer loyalty
                                • Figure 4: Intentions to renew, switch or cancel health policy at next renewal, by cover type, August 2018
                              • Good levels of interest in health cover products…
                                • Figure 5: Interest in health insurance products by the non-insured, August 2018
                              • …but lack of affordability remains a key barrier to increasing take-up
                                • Figure 6: Amount can afford to pay in monthly premiums, by type of product interested in, August 2018
                              • Key selling points of PMI
                                • Figure 7: Most appealing health insurance benefits, August 2018
                              • Key selling points of a cash plan
                                • Figure 8: Most appealing HCP benefits, August 2018
                              • Level of public concern about the NHS
                                • Figure 9: Level of concern regarding various health-related issues, August 2018
                              • What we think
                              • Issues and Insights

                                • PMI – the problem of affordability
                                  • The facts
                                    • The implications
                                      • HCPs – raise awareness of additional health benefits
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • The health insurance market is mature and stable
                                              • The market will remain flat in 2018-19
                                                • Profit margins squeezed by rising cost pressures
                                                  • NHS under strain
                                                    • Product affordability compounded by IPT rises
                                                    • Market Size

                                                      • Number of policies in force
                                                        • Figure 10: Number of PMI policies and health cash plans in force, 2018
                                                      • Personal PMI sector in steady decline due to affordability constraints
                                                        • Premium income to stabilise, at least over the short term
                                                          • Figure 11: Medical expenses insurance gross written premiums, 2016-19
                                                      • Claims Incurred and Underwriting Result

                                                        • The value of net claims incurred was up 10% in 2017…
                                                          • Figure 12: Medical expenses insurance – claims incurred and other outgoings (ABI members only), 2016-17
                                                        • …impacting on profitability
                                                          • Figure 13: Medical expenses insurance – Claims and underwriting ratios (ABI members only), 2016-17
                                                      • Market Drivers

                                                        • Brexit uncertainty is bad for business
                                                            • Figure 14: Key economic indicators, August 2018
                                                          • Brexit may increase demand for international PMI
                                                            • More patients in the UK are waiting over 18 weeks for treatment
                                                              • NHS England managing to meet the 6-week wait deadline for diagnostic tests despite higher demand levels
                                                                • Figure 15: Number of NHS patients waiting for diagnostic tests and procedures, and proportion who are waiting over six weeks (monthly basis) – England, June 2008 to June 2018
                                                              • NHS England continues to fall short of cancer waiting list targets
                                                                • Extra NHS funding is not enough
                                                                  • Figure 16: NHS England – Total departmental expenditure limits in real terms, 2013/14-2020/21
                                                                • GP numbers decline while demand rises
                                                                  • Health cash plans compete with vision- and dental-only plans
                                                                    • Most adults pay towards their dental care
                                                                        • Figure 17: Cost of NHS dental treatment in England, 2010/11-2018/19
                                                                      • 70% of UK adults wear prescription eyewear
                                                                      • Regulatory and Legislative Changes

                                                                        • IDD deadline approaches
                                                                          • IPT increase pushes up cost of health insurance
                                                                            • Figure 18: Changes to the standard rate of IPT, 2011-17
                                                                        • Companies and Brands – What You Need to Know

                                                                          • The UK health insurance market is heavily consolidated
                                                                            • Strong competition between providers
                                                                              • Technology leveraged to offer new services and benefits
                                                                                • Insurers turn their attention to mental health
                                                                                  • Vitality ups the ante by boosting adspend
                                                                                  • Market Share

                                                                                    • Bupa and AXA PPP are the big heavyweights
                                                                                      • Figure 19: Providers’ medical expenses insurance GWP (UK only), 2016-17
                                                                                    • Top performers in 2017
                                                                                      • Significant others
                                                                                      • Competitive Strategies

                                                                                        • Market movements
                                                                                          • M&A activity continues
                                                                                            • Westfield Health acquires UK Healthcare
                                                                                              • Cash plan providers move into occupational health and digital healthcare services
                                                                                                • Other recent acquisitions
                                                                                                  • APRIL UK withdraws from PMI market
                                                                                                    • Aviva pulls out of IPMI market
                                                                                                      • AXA sells its whole-of-market healthcare intermediary
                                                                                                        • New distribution partnerships
                                                                                                          • Bupa and Waitrose establish an exclusive partnership
                                                                                                            • British Friendly offers cash plan to income protection policyholders
                                                                                                              • Industry innovation
                                                                                                                • Targeting the fit and active
                                                                                                                  • Simplyhealth launches Active Plan
                                                                                                                    • AXA PPP publishes guide to promote fitness at work
                                                                                                                      • Harnessing digital technology
                                                                                                                        • The Exeter adopts a digital approach with launch of new PMI policy Health+
                                                                                                                          • Greater focus on mental health
                                                                                                                            • Other new products and services
                                                                                                                              • Bupa launches prostate cancer checks and cancer self-referral service
                                                                                                                                • National Friendly launches PMI plan to tackle long GP waiting times
                                                                                                                                  • Health Shield offers health screening to entire workforce
                                                                                                                                  • Advertising and Marketing Activity

                                                                                                                                    • Vitality boosts adspend in an effort to engage…
                                                                                                                                      • Figure 20: Above-the line, online display and direct mail advertising expenditure on health cover products by selected providers, 2015/16-2017/18
                                                                                                                                    • …and adopts an integrated approach
                                                                                                                                      • Benenden Health – a new name, a new campaign
                                                                                                                                        • Nielsen Ad Intel coverage
                                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                                          • 15% of UK adults have PMI, while 4% have a cash plan
                                                                                                                                            • Cancellation intentions among both PMI and HCP customers is very low
                                                                                                                                              • Expanding the market hampered by lack of affordability
                                                                                                                                                • Faster access to treatment is the top PMI selling point while money towards dental expenses is the most attractive benefit of a cash plan
                                                                                                                                                  • Many people are concerned about the health of the NHS
                                                                                                                                                  • Ownership of Medical Expenses Insurance

                                                                                                                                                    • 15% of UK adult internet users have private health insurance
                                                                                                                                                      • Figure 21: Ownership of health insurance, cash plans and related products, August 2018
                                                                                                                                                    • 3% have a condition-specific policy
                                                                                                                                                      • 5% have IPMI
                                                                                                                                                        • 4% have a cash plan
                                                                                                                                                          • Significant overlap between products
                                                                                                                                                            • Figure 22: Ownership of health insurance, cash plans and related products – Cross-analysis, August 2018
                                                                                                                                                          • Demographic profile of customers
                                                                                                                                                          • PMI Policyholders – Claims Experience and Renewal Intentions

                                                                                                                                                            • 50% of customers have made a claim on their health insurance
                                                                                                                                                              • Figure 23: Policyholder claims history, by cover type, August 2018
                                                                                                                                                            • Three times as many policyholders are expecting to upgrade or extend existing cover as downgrade
                                                                                                                                                              • Figure 24: Intentions to renew, switch or cancel health policy at next renewal, by cover type, August 2018
                                                                                                                                                            • Only 1% are expecting to cancel cover at their next renewal
                                                                                                                                                            • HCP holders – Claims Experience and Renewal Intentions

                                                                                                                                                              • 61% of HCP customers have made at least one claim within the past 12 months
                                                                                                                                                                • Figure 25: HCP subscriber claims history, August 2018
                                                                                                                                                              • 8% are planning to switch and just 2% to cancel cover altogether
                                                                                                                                                                • Figure 26: Intentions to renew, switch or cancel HCP at next renewal, August 2018
                                                                                                                                                            • The Non-insured and Interest in Health Cover Products

                                                                                                                                                              • Significant interest in health insurance products
                                                                                                                                                                • 5% are interested in getting a treatment-only policy…
                                                                                                                                                                  • …while 3% are keen on the concept of co-payment
                                                                                                                                                                    • Figure 27: Interest in health insurance products by the non-insured, August 2018
                                                                                                                                                                  • 11% are keen on health cash plans
                                                                                                                                                                    • Just 4% of those interested in health cover products can afford to pay £50 in monthly premiums
                                                                                                                                                                      • Figure 28: Amount can afford to pay in monthly premiums, by type of product interested in, August 2018
                                                                                                                                                                  • Most Appealing Product Benefits

                                                                                                                                                                    • Faster access to treatment is the main selling point of PMI
                                                                                                                                                                      • Figure 29: Most appealing health insurance benefits, by those who have cover and those interested in getting it, August 2018
                                                                                                                                                                    • Preferences differ between the sexes and across the age range
                                                                                                                                                                      • 72% of potential prospects find cash towards dental treatment appealing
                                                                                                                                                                        • Figure 30: Most appealing HCP benefits, by those who have a cash plan and those interested in getting one, August 2018
                                                                                                                                                                    • Concerns about the NHS, Health Costs and Getting Cover for a Pre-existing Condition

                                                                                                                                                                      • 64% are worried about waiting times to see a specialist
                                                                                                                                                                          • Figure 31: Level of concern regarding various health-related issues, August 2018
                                                                                                                                                                        • 54% are concerned about the cost of dental treatment
                                                                                                                                                                        • Appendix – Data Sources and Abbreviations

                                                                                                                                                                          • Abbreviations
                                                                                                                                                                            • Consumer research methodology