1. UK Private Medical Insurance 2012
Report Details:
Published:August 2012
No. of Pages: 61
Price: Single User License – US$3450
This report gives a comprehensive analysis of the UK private medical insurance sector. Three
exclusive surveys provide insight into consumer trends and intermediaries attitudes towards
private medical insurance. For the first time this report also highlights where advisors expect to
see 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 Datamonitor's forecasts on the PMI market, looking at alternatives to PMI and the effect
of NHS changes.
Highlights
The current economic environment has created a difficult market for providers of private medical
insurance (PMI), as both individuals and corporations struggle to maintain financial stability in light
of budget cuts. More consumers are reducing their non-compulsory insurance holding in an
attempt to save money.
Negative economic indicators have had a detrimental effect on the growth of private medical
insurance (PMI) in the last five years . PMI will remain a luxury product for those on high incomes
despite the proposed changes to the NHS. Consumers on lower incomes will continue to rely on
the 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?
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2. Major points covered in Table of Contents of this report include
Table of Contents
OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
As the unemployment rate remains high, private medical insurance is suffering in terms of
subscriber numbers
Those covered in both the individual and group market are falling in numbers
With the corporate market in decline, providers should focus on penetrating the small and
medium-sized enterprise sector
Providers must create a strategy to effectively target SMEs for PMI
Only 14% of consumers hold PMI as the National Health Service provides adequate healthcare for
consumers
Healthcare cash plans are potential alternatives to PMI as employers seek cost-cutting efficiencies
Healthcare cash plans have not suffered significantly at the hands of the recession
The future of non-compulsory insurance products is dependent on economic recovery
REVIEW OF 2011
Introduction
As the unemployment rate remains high, PMI suffers in terms of subscriber numbers
Despite a greater pool of clients, the group market witnessed a larger decline in GEP terms during
2010–11
The group market witnessed a year-on-year decline in GEP of 2.7% in 2011
Those covered in both the individual and group markets are falling in numbers
The total number of individuals covered under PMI fell by 3.0% between 2010–11
Insurers raised the cost of premiums by 4.1% over the five-year period 2007–11
The average policy premium rose by 8.7% in the individual market between 2010 and 2011
Employers are looking for alternative methods of ensuring a healthy workforce
The continuous desire to provide new improved healthcare has led to an increase in policy
premiums for PMI
Larger companies are not hiring as many employees as a direct result of recessionary strains
CONSUMER INSIGHT
Introduction
Only 14% of consumers hold PMI
Consumers do not hold PMI due to its cost and the availability of the NHS
PMI has a uniform target market across all age groups
High earners are more likely to hold a PMI policy provided through their workplace
63% of high income earners with PMI have it funded by their employer
The majority of consumers will not takeout PMI upon planned changes to the NHS being
implemented
MARKETING AND DISTRIBUTION
Introduction

3. Bupa spent £14.7m on advertising PMI in 2011
Bupa's annual performance report highlights a decrease in both revenue and profit
Direct mail advertising accounts for 47.8% of all PMI advertising
The top five insurers have a clear advertising strategy
The majority of consumers will utilize their employer for their PMI policy
54% of all policies are distributed through the employer
80% of advisors have advised on either individual or group PMI in the last 12 months
The sale of PMI can often be lengthy and highly individualized, and will therefore require the
professional advice of an advisor
Advisors are confident that private healthcare will see an increase in 2013
Advisors predict that the greatest increase will be seen within the group cash plan market
Advisors are finding that individual PMI is not suitable for the majority of their clients
The growth of the group market has left the individual market unattractive to consumers
Consumers are not utilizing aggregator sites for purchasing PMI
86% of consumers did not use an aggregator site when taking out PMI
Aggregator sites are used for research purposes only by those aged 18–24
Price comparison sites are not always suited to the personal side of PMI policies
ALTERNATIVES TO PRIVATE MEDICAL INSURANCE
Introduction
Healthcare cash plans have the potential to grow as employers look to cut costs
Healthcare cash plans have not suffered significantly at the hands of the recession
Private dental care has huge potential as NHS waiting lists become longer
Healthcare and dental cash plans are a significant opportunity for the growth of private healthcare
COMPETITOR DYNAMICS
Introduction
Bupa remains the leading provider within the PMI market
Bupa's key target demographic is aged between 18–44
Simplyhealth witnessed the greatest year-on-year growth of 30.9%
Providers must create a strategy to effectively target SMEs for PMI
More than 99.8% of UK companies are SMEs
AXA currently dominates the sale of PMI within the SME market
Acquisitions in 2011 have left the top five PMI providers with an even greater market share
AXA PPP takes over Health-On-Line to attract new entrants to the market
Simplyhealth takes over Groupama with the aim to launch a new product by the end of 2012
Product innovation is vital to increasing subscriber numbers
Bupa has introduced a short-term international PMI product to enhance its healthcare offering
Passport2Health launches a low cost European alternative to traditional PMI
Simplyhealth combine elements of PMI and corporate cash plans for cost-saving employers
FUTURE DECODED
Introduction
The future of non-compulsory insurance products is dependent on economic recovery
The current economic climate makes it difficult to encourage consumers into the PMI market

4. Economic indicators do not predict significant growth in the near future
GDP growth of 2.0% over the next five years will be boost consumer confidence in the economy
Lower unemployment in the UK has potential to increase PMI holding
Changes to the NHS are unlikely to affect PMI until at least 2016
The NHS scenario will leave consumers indifferent until they are directly affected
Continuous consolidation leaves the market concentrated among only a few key players
A concentrated market is likely to result in an increase in policy premiums for new customers
The top five competitors in the market hold a 93% share of the market, with this unlikely to change
in the next five years
The PMI market will see minimal growth over the next five years
Individual subscriber numbers will continue to fall over the next five years
Corporate subscribers will witness small growth as the job market begins to strengthen
Healthcare cash plans will be a key growth opportunity over the next five years
Overall it will be a few years until the industry will really know where PMI is headed
APPENDIX
Methodology
Datamonitor General Insurance Consumer Survey 2012
Datamonitor Financial Services Consumer Insight Survey 2011
Datamonitor UK IFA Protection Survey 2012
Definitions
Earned premium
Gross premium
Net premium
Private medical insurance
Written premium
Internet sources
Further reading
Ask the analyst
Disclaimer
List of Tables
Table: UK GEP, healthcare cash plans (£000s), 2008–10
Table: Number of corporate and personal PMI subscribers, and UK unemployment rate (%),
2007–11
Table: UK PMI GEP, corporate and personal (£m), 2007–11
Table: Number of people covered in both the corporate and personal markets (000s), 2007–11
Table: Average policy price, total/corporate/personal (£), 2007–11
Table: 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? (by
age)
Table: Total PMI advertising expenditure (£), 2011
Table: Distribution of PMI advertising spend among the top five spenders

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), 2008–10
Table: Real household disposable income, year-on-year percentage change, 2007–12
Table: Who is your medical insurance provider? (by age)
Table: GWP for the top 10 UK PMI providers (£000s), 2008–11
Table: Top five insurers for PMI, by method of purchase (%), 2011
Table: Economic forecasts (HM Treasury) data pocket, 2012f–16f
Table: Forecast of UK PMI GEP (£m), 2012f–16f
Table: Forecast of UK PMI subscriber numbers (000s), 2012f–16f
Table: Forecast healthcare cash plans GEP (£000s), 2012f–16f
List of Figures
Figure: The number of subscribers of PMI continues to decline in line with a rise in the
unemployment rate
Figure: PMI currently has a fairly low penetration among SMEs
Figure: Only 14% of consumers in Datamonitor's 2012 General Insurance Consumer Survey held
PMI
Figure: Subscribers of PMI continue to decline in line with a rise in the unemployment rate
Figure: GEP has risen in the last five years as insurers have increased the cost of PMI
Figure: Despite earlier positive signs in the corporate market, it has since declined dramatically
Figure: The individual PMI market is becoming increasingly more expensive despite the economic
downturn
Figure: Innovations in medical treatments coupled with the current economic environment have led
to a decrease in the number of subscribers to PMI
Figure: Only 14% of consumers in Datamonitor's survey held PMI in 2011
Figure: Consumers view PMI as expensive and unnecessary
Figure: PMI is fairly uniform across all age groups
Figure: As income increases PMI becomes more popular as an employee benefit
Figure: NHS changes will not result in a surge of new business for PMI
Figure: Bupa accounted for 34% of total PMI advertising expenditure in 2011
Figure: There is a clear advertising strategy among the top five insurers
Figure: 54% of all policies are distributed through the employer
Figure: Advisors have found group PMI to be a profitable business stream in the last 12 months
Figure: Group cash plans are seen as a cost-effective method of providing health benefits for
employees
Figure: There are three key growth opportunities for advisors in the healthcare market
Figure: The growth of group PMI has left very little room for growth in the individual market
Figure: The majority of consumers do not utilize aggregator sites for the take-up of PMI
Figure: Those aged between 18–24 are key targets for growth of PMI through aggregator sites
Figure: In 2011 Bupa was the leading provider of PMI
Figure: Consumers aged between 35–44 are the most likely to take out PMI with Bupa

6. Figure: PMI currently has a fairly low penetration among SMEs
Figure: AXA accounts for 20% of the market for PMI in the SME sector
Figure: Only 4% of consumers expect to take out PMI as a result of proposed changes to the NHS
Figure: PMI is dominated by five key players in the market
Figure: Unlike subscriber numbers, GEP will witness small but steady growth between 2012–16
Figure: Individual subscriber numbers will continue to decline as the cost of PMI rises
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