UK Private Medical Insurance 2012


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UK Private Medical Insurance 2012

  1. 1. UK Private Medical Insurance 2012Report Details:Published:August 2012No. of Pages: 61Price: Single User License – US$3450This report gives a comprehensive analysis of the UK private medical insurance sector. Threeexclusive surveys provide insight into consumer trends and intermediaries attitudes towardsprivate medical insurance. For the first time this report also highlights where advisors expect tosee growth in 2013.Features and benefits•Key consumer insight in to individual trends, attitudes and buying behaviour.•Market analysis and extensive data on the key players within the PMI market.•The future of the PMI market according to intermediaries, including where their focus will be in 2013.•Access Datamonitors forecasts on the PMI market, looking at alternatives to PMI and the effect of NHS changes.HighlightsThe current economic environment has created a difficult market for providers of private medicalinsurance (PMI), as both individuals and corporations struggle to maintain financial stability in lightof budget cuts. More consumers are reducing their non-compulsory insurance holding in anattempt to save money.Negative economic indicators have had a detrimental effect on the growth of private medicalinsurance (PMI) in the last five years . PMI will remain a luxury product for those on high incomesdespite the proposed changes to the NHS. Consumers on lower incomes will continue to rely onthe NHS.Your key questions answered•What are the key competitors in the market doing to reverse the current decline in the PMI market?•How do consumers behave when taking out PMI and what prevents them from engaging with the product?•What factors limit the success of new product innovations in the PMI market?Get your copy of this report @
  2. 2. Major points covered in Table of Contents of this report includeTable of ContentsOVERVIEWCatalystSummaryEXECUTIVE SUMMARYAs the unemployment rate remains high, private medical insurance is suffering in terms ofsubscriber numbersThose covered in both the individual and group market are falling in numbersWith the corporate market in decline, providers should focus on penetrating the small andmedium-sized enterprise sectorProviders must create a strategy to effectively target SMEs for PMIOnly 14% of consumers hold PMI as the National Health Service provides adequate healthcare forconsumersHealthcare cash plans are potential alternatives to PMI as employers seek cost-cutting efficienciesHealthcare cash plans have not suffered significantly at the hands of the recessionThe future of non-compulsory insurance products is dependent on economic recoveryREVIEW OF 2011IntroductionAs the unemployment rate remains high, PMI suffers in terms of subscriber numbersDespite a greater pool of clients, the group market witnessed a larger decline in GEP terms during2010–11The group market witnessed a year-on-year decline in GEP of 2.7% in 2011Those covered in both the individual and group markets are falling in numbersThe total number of individuals covered under PMI fell by 3.0% between 2010–11Insurers raised the cost of premiums by 4.1% over the five-year period 2007–11The average policy premium rose by 8.7% in the individual market between 2010 and 2011Employers are looking for alternative methods of ensuring a healthy workforceThe continuous desire to provide new improved healthcare has led to an increase in policypremiums for PMILarger companies are not hiring as many employees as a direct result of recessionary strainsCONSUMER INSIGHTIntroductionOnly 14% of consumers hold PMIConsumers do not hold PMI due to its cost and the availability of the NHSPMI has a uniform target market across all age groupsHigh earners are more likely to hold a PMI policy provided through their workplace63% of high income earners with PMI have it funded by their employerThe majority of consumers will not takeout PMI upon planned changes to the NHS beingimplementedMARKETING AND DISTRIBUTIONIntroduction
  3. 3. Bupa spent £14.7m on advertising PMI in 2011Bupas annual performance report highlights a decrease in both revenue and profitDirect mail advertising accounts for 47.8% of all PMI advertisingThe top five insurers have a clear advertising strategyThe majority of consumers will utilize their employer for their PMI policy54% of all policies are distributed through the employer80% of advisors have advised on either individual or group PMI in the last 12 monthsThe sale of PMI can often be lengthy and highly individualized, and will therefore require theprofessional advice of an advisorAdvisors are confident that private healthcare will see an increase in 2013Advisors predict that the greatest increase will be seen within the group cash plan marketAdvisors are finding that individual PMI is not suitable for the majority of their clientsThe growth of the group market has left the individual market unattractive to consumersConsumers are not utilizing aggregator sites for purchasing PMI86% of consumers did not use an aggregator site when taking out PMIAggregator sites are used for research purposes only by those aged 18–24Price comparison sites are not always suited to the personal side of PMI policiesALTERNATIVES TO PRIVATE MEDICAL INSURANCEIntroductionHealthcare cash plans have the potential to grow as employers look to cut costsHealthcare cash plans have not suffered significantly at the hands of the recessionPrivate dental care has huge potential as NHS waiting lists become longerHealthcare and dental cash plans are a significant opportunity for the growth of private healthcareCOMPETITOR DYNAMICSIntroductionBupa remains the leading provider within the PMI marketBupas key target demographic is aged between 18–44Simplyhealth witnessed the greatest year-on-year growth of 30.9%Providers must create a strategy to effectively target SMEs for PMIMore than 99.8% of UK companies are SMEsAXA currently dominates the sale of PMI within the SME marketAcquisitions in 2011 have left the top five PMI providers with an even greater market shareAXA PPP takes over Health-On-Line to attract new entrants to the marketSimplyhealth takes over Groupama with the aim to launch a new product by the end of 2012Product innovation is vital to increasing subscriber numbersBupa has introduced a short-term international PMI product to enhance its healthcare offeringPassport2Health launches a low cost European alternative to traditional PMISimplyhealth combine elements of PMI and corporate cash plans for cost-saving employersFUTURE DECODEDIntroductionThe future of non-compulsory insurance products is dependent on economic recoveryThe current economic climate makes it difficult to encourage consumers into the PMI market
  4. 4. Economic indicators do not predict significant growth in the near futureGDP growth of 2.0% over the next five years will be boost consumer confidence in the economyLower unemployment in the UK has potential to increase PMI holdingChanges to the NHS are unlikely to affect PMI until at least 2016The NHS scenario will leave consumers indifferent until they are directly affectedContinuous consolidation leaves the market concentrated among only a few key playersA concentrated market is likely to result in an increase in policy premiums for new customersThe top five competitors in the market hold a 93% share of the market, with this unlikely to changein the next five yearsThe PMI market will see minimal growth over the next five yearsIndividual subscriber numbers will continue to fall over the next five yearsCorporate subscribers will witness small growth as the job market begins to strengthenHealthcare cash plans will be a key growth opportunity over the next five yearsOverall it will be a few years until the industry will really know where PMI is headedAPPENDIXMethodologyDatamonitor General Insurance Consumer Survey 2012Datamonitor Financial Services Consumer Insight Survey 2011Datamonitor UK IFA Protection Survey 2012DefinitionsEarned premiumGross premiumNet premiumPrivate medical insuranceWritten premiumInternet sourcesFurther readingAsk the analystDisclaimerList of TablesTable: UK GEP, healthcare cash plans (£000s), 2008–10Table: Number of corporate and personal PMI subscribers, and UK unemployment rate (%),2007–11Table: UK PMI GEP, corporate and personal (£m), 2007–11Table: Number of people covered in both the corporate and personal markets (000s), 2007–11Table: Average policy price, total/corporate/personal (£), 2007–11Table: Which of these products do you currently hold? (by age group)Table: Who funds your private medical insurance? (by income)Table: Upon the planned changes to the NHS do you intend to take out any of the following? (byage)Table: Total PMI advertising expenditure (£), 2011Table: Distribution of PMI advertising spend among the top five spenders
  5. 5. Table: In general, how do you expect these products to perform over the next 12 months?Table: Why do you not advise on these products?Table: When arranging your policy did you visit any price comparison sites? (by age)Table: UK healthcare cash plans GEP (£m), 2008–10Table: Real household disposable income, year-on-year percentage change, 2007–12Table: Who is your medical insurance provider? (by age)Table: GWP for the top 10 UK PMI providers (£000s), 2008–11Table: Top five insurers for PMI, by method of purchase (%), 2011Table: Economic forecasts (HM Treasury) data pocket, 2012f–16fTable: Forecast of UK PMI GEP (£m), 2012f–16fTable: Forecast of UK PMI subscriber numbers (000s), 2012f–16fTable: Forecast healthcare cash plans GEP (£000s), 2012f–16fList of FiguresFigure: The number of subscribers of PMI continues to decline in line with a rise in theunemployment rateFigure: PMI currently has a fairly low penetration among SMEsFigure: Only 14% of consumers in Datamonitors 2012 General Insurance Consumer Survey heldPMIFigure: Subscribers of PMI continue to decline in line with a rise in the unemployment rateFigure: GEP has risen in the last five years as insurers have increased the cost of PMIFigure: Despite earlier positive signs in the corporate market, it has since declined dramaticallyFigure: The individual PMI market is becoming increasingly more expensive despite the economicdownturnFigure: Innovations in medical treatments coupled with the current economic environment have ledto a decrease in the number of subscribers to PMIFigure: Only 14% of consumers in Datamonitors survey held PMI in 2011Figure: Consumers view PMI as expensive and unnecessaryFigure: PMI is fairly uniform across all age groupsFigure: As income increases PMI becomes more popular as an employee benefitFigure: NHS changes will not result in a surge of new business for PMIFigure: Bupa accounted for 34% of total PMI advertising expenditure in 2011Figure: There is a clear advertising strategy among the top five insurersFigure: 54% of all policies are distributed through the employerFigure: Advisors have found group PMI to be a profitable business stream in the last 12 monthsFigure: Group cash plans are seen as a cost-effective method of providing health benefits foremployeesFigure: There are three key growth opportunities for advisors in the healthcare marketFigure: The growth of group PMI has left very little room for growth in the individual marketFigure: The majority of consumers do not utilize aggregator sites for the take-up of PMIFigure: Those aged between 18–24 are key targets for growth of PMI through aggregator sitesFigure: In 2011 Bupa was the leading provider of PMIFigure: Consumers aged between 35–44 are the most likely to take out PMI with Bupa
  6. 6. Figure: PMI currently has a fairly low penetration among SMEsFigure: AXA accounts for 20% of the market for PMI in the SME sectorFigure: Only 4% of consumers expect to take out PMI as a result of proposed changes to the NHSFigure: PMI is dominated by five key players in the marketFigure: Unlike subscriber numbers, GEP will witness small but steady growth between 2012–16Figure: Individual subscriber numbers will continue to decline as the cost of PMI risesContact: for more information.