Private Medical Insurance in the UK, Key Trends and Opportunities to 2017

Private Medical Insurance in the UK, Key Trends and Opportunities to 2017

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Gross written premiums in the private medical insurance category amounted to GBP3.65 billion in 2012, recording growth of 3.2% from 2011, and a compound annual growth rate (CAGR) of 2.47% during the review period (2008-2012).

Favorable developments in premiums belie the underlying trends in demand, however. As a discretionary insurance product, supplementary to free-to-access healthcare through the National Health Service (NHS), the number of private medical policyholders has been subject to a downwards trend since 2006 and hit its lowest level on record in 2012, at 5.6 million. Factors driving the apparent shift in attitudes include improved levels of satisfaction with the NHS, increased public healthcare spending, and deterioration in labor market conditions.

The market for private medical insurance is dominated by four insurers - Bupa, Axa, Aviva and Prudential - which have a combined market share of 92%. Despite this concentrated market, a lack of competition between private hospital operators has restricted insurers' bargaining power and resulted in inflated claims costs. Coupled with the decline in customer numbers, this has been the biggest driver of premium growth as insurers responded to drags on profitability by raising prices for customers.

The consumer shift away from private medical insurance is unlikely to be fully reversed. Nevertheless, favorable forces will underpin a modest CAGR of 2% for gross written premiums over the forecast period (2013-2017). A recovery in economic growth will improve wage and employment conditions, NHS reforms are expected to advance the role of the private healthcare and insurance sector, while the UK's evolving demographic profile will increase the strain on the public healthcare system.

Improving economic conditions do not prescribe continued growth in the category, however, as the recession-induced demand for lower-cost policy coverage has spurred an increase in the popularity and availability of cheaper healthcare cash plans and self-pay options for one-off treatments. This new market dynamic threatens to divert customers away from comprehensive, but high-premium private medical insurance policies.

Report Highlights
  • Private medical insurance premiums rose by 3.2% in 2012
  • Demand shifted away from the private healthcare sector
  • Minimal competition among private suppliers has increased costs for insurers
  • Competition Commission intervention should begin to alleviate cost constraints
  • Premium growth will be sustained, despite opposing forces
  • Private medical insurance is under threat from lower-cost alternatives
Report Scope
  • This report provides market analysis, information and insights into the UK private medical insurance business
  • It provides a global snapshot of market size
  • It analyses drivers and the outlook for the market
  • It provides information on distribution channels
  • It covers deals, news and regulatory developments
Reasons to Get this Report
  • Gain an understanding of the UK private medical insurance market size
  • Learn about the performance of market drivers and distribution channels
  • Understand the competitive landscape in terms of performance, profitability and product innovation
  • Find out more on key deals and recent developments in the market

Table of Contents

1 Executive Summary
2 Introduction
2.1 What is this Report About?
2.2 Definitions
2.3 Methodology
3 Market Analysis
3.1 Market Size
3.1.1 Penetration and density
3.2 Claims
3.2.1 Claims review
3.2.2 Claims outlook
3.3 Market Drivers
3.4 Market Outlook
3.5 Distribution Channels
3.5.1 Distribution outlook
4 Competitive Landscape
4.1 Profitability
4.1.1 Investment returns
4.1.2 Profitability outlook
4.2 Review - The Best Performers of 2012
4.3 Product Innovation
4.4 Private Medical Insurance - SWOT Analysis
5 Porter's Five Forces Analysis
5.1 Bargaining Power of Suppliers: High
5.2 Bargaining Power of Buyers: Medium
5.3 Barriers to Entry: Medium
5.4 Intensity of Rivalry: Medium to High
5.5 Threat of Substitution: High
6 Deals
6.1 Axa Signs Broker Deal
6.2 Bupa Creates Global Insurance Network
6.3 Bupa Extends Deal with UK Sport
6.4 Aviva Partners with Chartered Society of Physiotherapy
6.5 Prudential Continues Sponsorship of Sporting Events
7 News
7.1 UK Expats Lose Free Healthcare Access
7.2 Aviva Release Cancer Claims Statistics
7.3 Adviser Roadshows to Garner Sales Opportunities
7.4 Patient Records Obtained by Actuarial Institute
7.5 Health Insurance High on Employees' Wish Lists
7.6 Aviva Wins Health Insurance Awards
7.7 Government Consults on Visitor Medical Insurance Requirements
7.8 Inaugural Advisory Board for PruHealth Scheme
8 Regulation and Compliance
8.1 Recent Changes
8.1.1 Health and Social Care Act 2012
8.2 Upcoming Regulations
8.2.1 Solvency II
9 Macroeconomic Backdrop
9.1 Real GDP Growth
9.2 Labor Market Conditions
9.3 Interest Rates
9.4 Demographics
10 Company Profiles
10.1 Aviva Plc - Company Overview
10.1.1 Aviva Plc - key facts
10.1.2 Aviva Plc - main products
10.1.3 Aviva Plc - main competitors
10.1.4 Aviva Plc - key employees
10.2 Axa UK Plc - Company Overview
10.2.1 Axa UK Plc - key facts
10.2.2 Axa UK Plc - main products
10.2.3 Axa UK Plc - main competitors
10.2.4 Axa UK Plc - key employees
10.3 Bupa Insurance Ltd - Company Overview
10.3.1 Bupa Insurance Ltd - key facts
10.3.2 Bupa Insurance Ltd - main products
10.3.3 Bupa Insurance Ltd - main competitors
10.3.4 Bupa Insurance Ltd - key employees
10.4 Chubb Insurance Company of Europe SE - Company Overview
10.4.1 Chubb Insurance Company of Europe SE - key facts
10.4.2 Chubb Insurance Company of Europe SE - main products
10.4.3 Chubb Insurance Company of Europe SE - main competitors
10.4.4 Chubb Insurance Company of Europe SE - key employees
10.5 Cigna Life Insurance Company of Europe SA-NV - Company Overview
10.5.1 Cigna Life Insurance Company of Europe SA-NV - key facts
10.5.2 Cigna Life Insurance Company of Europe SA-NV - main products
10.5.3 Cigna Life Insurance Company of Europe SA-NV - main competitors
10.5.4 Cigna Life Insurance Company of Europe SA-NV - key employees
10.6 Exeter Friendly Society Ltd - Company Overview
10.6.1 Exeter Friendly Society Ltd - key facts
10.6.2 Exeter Friendly Society Ltd - main products
10.6.3 Exeter Friendly Society Ltd - main competitors
10.6.4 Exeter Friendly Society Ltd - key employees

Companies Mentioned:

Aviva Plc
Axa UK Plc
Bupa Insurance Ltd
Chubb Insurance Company of Europe SE
Cigna Life Insurance Company of Europe SA-NV
Exeter Friendly Society Ltd
Great Lakes Reinsurance (UK) Plc
Prudential Plc
Simplyhealth Group Ltd
Western Provident Association