Report: Health Cash Plans - UK

Issues in the Market
Key issues examined
Market definitions
Abbreviations
Market in Brief
A fairly small market, but with much potential
A number of factors give fresh impetus to the market
Individual and employee-paid policies represent the bulk of in-force business
Providers managing claim costs well, given the sharp rise in their volume...
...and have successfully diversified into new areas
One organisation controls nearly half the market
Most HCPs are sold through direct channels
The main findings of Mintel' s consumer survey
Results show a healthy subscriber base
Dental and optical benefits top the rankings
- Figure 1: HCP benefits in order of popularity, by HCP subscribers (illustration), July 2007
Potential to increase HCP penetration fivefold
- Figure 2: Potential size of the HCP subscriber base (illustration), July 2007
Broader Market Environment
Key points
Slower income growth will drive demand for affordable healthcare
- Figure 3: Total PDI, consumer expenditure and PDI per capita, at constant 2003 prices, 2003-12
Implication and opportunity
Household spend on healthcare rises by a fifth in just three years
- Figure 4: Household expenditure on healthcare and hospital services, by component, 2005/06
Implication and opportunity
Reduced NHS investment post-2008
The impact of changing lifestyles and working patterns
Extending patient choice
Implication and opportunity
The SME market
- Figure 5: Number of private sector enterprises, employees and turnover -- UK, start 2006
Implication and opportunity
Strong demand for health cover among employees
- Figure 6: Top ten company benefits and ten most desired, January 2007
Weighing up the costs
Implication and opportunity
Diversifying into new markets: occupational health
Internal Market Environment
Key points
Claims ratio remains within predictable parameters
- Figure 7: Claim amounts incurred and claims as a proportion of contribution income earned, 2000-06
Implication
Dental treatment accounts for the largest proportion of claims
- Figure 8: Proportional distribution of claims (volume and value), by benefit category, 2005 and 2006
Fewer visit the dentist post-April 2006
- Figure 9: Active patient registrations in England and Wales, 2003-06
All change
Implication and opportunity
New NHS price bands
- Figure 10: Dental charges in England, 2007
Two thirds of adults wear specs or lenses
Voucher entitlements
Millions get their eyes tested each year
Sight test fees
Competitive Context
Key points
Dental plans appear more popular than cash plans...
- Figure 11: Penetration of HCPs and related health insurance products, July 2007
...with demand boosted by the decline in NHS dentistry
New affordable PMI poses threat to cash plans
PMI: a market revived
- Figure 12: Number of PMI subscribers, people covered and gross earned premiums, 2002-07
Implication and opportunity (or threat?)
Healthy demand for OH services is a positive trend
- Figure 13: Size of the UK market for occupational health provision, 2002-06
Strengths and Weaknesses
- Figure 14: HCPs -- SWOT analysis, 2007
Market Size and Forecast
Key points
HCP market at a crucial turning point
- Figure 15: Number of HCP subscribers, people covered and contribution income earned, 2002-07
Contributing factors to recent decline
A fresh approach needed?
The corporate sector represents a silver lining
- Figure 16: Proportional distribution of HCP subscriber base, by sector, 2006
Competitive pressures depress premium inflation
- Figure 17: Average HCP premium, by sector, 2002-07
Implication
Standard scenario predicts steady growth
- Figure 18: Forecast of HCP subscribers and contribution income earned -- standard scenario, 2007-12
Note about the forecast
Positive scenario assumes faster premium growth
- Figure 19: Forecast of HCP subscribers and contribution income earned -- positive scenario, 2007-12
Factors incorporated
Market Share
Key points
Contraction in supply
Not-for-profit organisations dominate the HCP market
- Figure 20: HCP provider rankings, by contribution income, 2005 and 2006
Market leader, Simplyhealth controls almost half the market
- Figure 21: Illustration of HCP providers' market shares, 2005 and 2006
Companies and Products
Simplyhealth Group
Westfield Health
BHSF
Medicash
Brand Communication and Promotion
Key points
Total industry adspend stabilises...
- Figure 22: Total advertising expenditure on HCPs and other health insurance products, 2002/03-2006/07
...although many HCP providers cut back on advertising
- Figure 23: Advertising expenditure by selected HCP providers, 2004/05-2006/07
Providers prefer to advertise in the press
- Figure 24: Distribution of advertising expenditure for selected HCP providers, by media type, 2006/07
HSA' s ' crazy' ad
Event sponsorship and charitable work
Channels to Market
Key points
Direct sales dominate
- Figure 25: Proportional distribution of HCP sales, by channel, 2005 and 2006
Implication and opportunity
The workplace remains an important marketing channel
Online advances
The Consumer -- Product Penetration
Key points
Survey background
Low penetration of health cash plans
- Figure 26: Ownership of HCPs and other related products, July 2007
Assessing penetration: a note about the data
Significant product overlap
- Figure 27: Ownership of HCPs and other related products -- cross-analysis, July 2007
Implication
Are health cash plans losing out to dental plans?
- Figure 28: Trends in ownership of HCPs and other health products, 2003-07
Implication and opportunity
The typical HCP subscriber is aged 35-64
Implication and opportunity
CHAID analysis
- Figure 29: Target groups identified for health insurance products, July 2007
Implication and opportunity
The Consumer -- Health Status and Health Needs
Key points
HCP subscribers are very health-conscious
- Figure 30: Health status, by ownership of HCPs and related products, July 2007
- Figure 31: Health status of HCP subscribers versus total sample (illustration), July 2007
Over-55s watch their diet
- Figure 32: Health status, by gender and age, July 2007
HCP subscribers most likely to use the services of a health professional
- Figure 33: Health check-ups and other experiences, by ownership of HCPs and related products, July 2007
- Figure 34: Health check-ups and other experiences, by ownership of HCPs and related products, July 2007
Implication and opportunity
Why are men less likely to go to the doctors?
- Figure 35: Health check-ups and other experiences, by gender, July 2007
Implication and opportunity
Two fifths of over-65s have not visited a dentist in the past two years
- Figure 36: Health check-ups and other experiences, by age, July 2007
Implication and opportunity
Londoners least likely to visit a GP or a dentist
- Figure 37: Health check-ups and other experiences, by region, July 2007
Implication and opportunity
Difficulty registering with NHS dentist is a likely catalyst for taking out an HCP or dental plan
- Figure 38: Proportion of adults who have had difficulty accessing health advice or treatment, by ownership of HCPs and related products, July 2007
Implication and opportunity
25-34-year-olds face problems accessing NHS dental treatment
- Figure 39: Proportion of adults who have had difficulty accessing health advice or treatment, by gender and age, July 2007
Londoners are over 50% more likely to say they' ve had problems registering with a GP
- Figure 40: Proportion of adults who have had difficulty accessing health advice or treatment, by region, July 2007
Product Penetration -- Detailed Demographics
- Figure 54: Ownership of HCPs and related products, by gender, age, socio-economic group, marital status, lifestage, Mintel' s Special Groups and working status, July 2007
- Figure 55: Ownership of HCPs and related products, by tenure, gross annual household income, region and ACORN category, July 2007
- Figure 56: Ownership of HCPs and related products, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, July 2007

Health Cash Plans - UK - November 2007

Table of Contents