[Report] UK Private Medical Insurance Market Research, Trends, Analysis TOC

Overview
- Catalyst
- Summary
Executive Summary
- The UK PMI market grew in 2006 as subscriber numbers and average premiums increased
- Premium income for UK private medical insurance grew to £3 billion in 2006 in GEP terms
- PMI subscriber numbers increased in both sectors in 2006
- Premium rates fell in the group sector and grew slowly in the individual sector in 2006
- The individual sector is concerned with lowering costs to attract more policyholders
- The group sector is concerned with developing wellness propositions to complement PMI offerings
Uptake of PMI is still relatively low in the population but peaks among wealthy individuals aged 45 to 54
- Only around 12% of consumers have private medical insurance
- Cost of cover is the main reason given by consumers for not wanting private medical insurance
- Penetration rates are highest among wealthy consumers aged 45 to 54
BUPA and AXA dominate the market but the ranking of other players were influenced by consolidation in 2006
- BUPA and AXA lead the PMI market, writing significantly more business than their nearest competitors
- The ranking of the remainder of the top 10 was influenced by the merger and acquisition activity seen in 2005
The market is forecast to grow over the next five years although the increase in subscribers will be modest
- Individual subscriber numbers are expected to fall but group subscribers will grow modestly
- Premium rates inflation will be highest in the individual sector throughout the forecast period
- The total PMI market will be worth £3.9 billion in GEP terms by 2012
Table of Contents
Table of figures
Table of tables
Market Context
- Introduction
- The UK PMI market grew by 2.9% in 2006, driven by increases in subscribers and premiums
  - Premium income for UK private medical insurance grew to £3 billion in 2006 in GEP terms
  - PMI subscriber numbers increased in both sectors in 2006
  - Premium rates fell in the group sector and grew only slowly in the individual sector in 2006
- The health insurance market grew its profit in 2006 and insurers bought less reinsurance
  - The underwriting profit increased for the UK health insurance market in 2006
  - UK health insurers ceded less premiums to the reinsurance industry in 2006
- The individual and the group markets are dealing with different key challenges
  - The individual sector is concerned with lowering costs to attract more policyholders
    - Insurers can use a number of measures to lower the cost of premiums
    - Insurers can also introduce new cheaper policies specifically aimed at attracting new customers
  - The group sector is concerned with developing wellness propositions to complement PMI offerings
Customer Focus
- Introduction
- Uptake of PMI remains relatively low, with most consumers not interested in the product
  - Only around 12% of consumers have private medical insurance
  - Interest in the insurance remains low among those that currently do not have private medical insurance
  - Cost of cover is the main reason given by consumers for not wanting private medical insurance
- Most consumers with PMI are between 45 and 54 in age and fall into the highest income brackets
  - Penetration rates are highest among consumers aged 45 to 54
  - Uptake of PMI is highest among wealthy consumers
- PMI is mainly arranged via employers but distribution arrangements vary by age
  - A growing majority of consumers with PMI arrange it through their employer
  - Arrangements of PMI through employers peak among consumers aged 25-34 and falls thereafter
    - Employers pay for all or part of the majority of consumers' PMI
  - The telephone is the most popular method among those that do not arrange cover via employers
  - New distributors entered the market in 2007 in the form of Tesco and Boots
    - Tesco entered the PMI market in 2007 in partnership with AXA PPP
    - Boots launched a PMI product in April 2007 partnering with PruHealth
    - The entry of Tesco and Boots into the market could boost individual policy numbers
- The top 10 PMI advertisers spent a total of £27m in 2006, focusing on direct mail advertising
  - Only three of the top 10 advertisers increased their advertising spend between 2005 and 2006
  - Direct mail was the most popular medium for advertising PMI in 2006, although some favor TV advertising
Competitive Dynamics
- Introduction
- BUPA and AXA remained market leaders in 2006, while M&A activity influenced the top 10
  - BUPA and AXA lead the PMI market, writing significantly more business than their nearest competitors
  - The ranking of the remainder of the top 10 was influenced by the merger and acquisition activity seen in 2005
- BUPA, AXA and Norwich Union are the main players in the individual PMI market
  - The individual market is dominated by BUPA, AXA and Norwich Union
  - The rest of the top 10 are relatively small and only a few increased their market share in 2006
- BUPA and AXA dominate group PMI, with other players remaining small in market share terms
  - BUPA and AXA were also the market leaders in the group PMI market in 2006
    - BUPA sold its hospitals in 2007 and announced new deals in the group market
    - AXA increased its market share by 0.7 percentage points in 2006 and is looking to grow further
  - Some smaller players in the group market achieved increases in GWP but remain small in market share terms
The Future Decoded
- Introduction
- Two forecast scenarios will be presented reflecting different views on the individual market
  - The main factors that influence the size of the PMI market are subscriber numbers and pricing strategies
  - Two scenarios will be presented with different assumptions about future subscriber numbers
  - Changes to NHS funding could influence future GWP growth but this has not been included in this forecast
- In scenario one, the number of individual subscribers will fall in the forecast period
  - A range of factors influence GEP in scenario one
  - In scenario one, individual subscriber numbers are expected to fall but group subscribers will grow modestly
  - Premium rates inflation will be highest in the individual sector throughout the forecast period
  - The total PMI market will be worth £3.9 billion in GEP terms by 2012
- In scenario two, an increase in individual subscribers will lead to stronger GEP growth
  - A range of assumptions influence the GEP forecast in scenario two
  - In scenario two, the number of individual subscribers are set to grow following the increase seen in 2006
  - Individual average premiums will rise slower as new cheaper policies become more popular
  - The PMI market is forecast to grow to a value of £4.2 billion by 2012 in scenario two
Appendix
- Supplementary data
- Definitions
  - Premium income measures
    - Earned premiums
    - Gross Premium
    - Net Premium
    - Written premiums
  - 2005-06 definitions for lines of business
    - Accident & health
    - Medical expenses
    - HealthCare cash plan
    - Travel
    - Personal accident or sickness
  - Pre-2005 definitions of accident and health
    - Individual accident and health
    - Group accident and health
  - Competitor data
    - GWP versus GEP reporting
    - Home-Foreign, overseas and facultative reinsurance business
  - Advertising statistics
  - Ipsos MORI methodology and contacts
    - Sample design
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer

List of Tables

Table 1: UK private medical insurance GEP by sector, 2002-06 (£m)
Table 2: UK PMI subscribers and people covered by policy type, 2002-06
Table 3: UK PMI average policy premium by policy type, 2002-06 (£)
Table 4: UK health insurance market underwriting result, 2002-06 (£m)
Table 5: UK health reinsurance ceded and reinsurers' share of claims, 2002-06 (£m)
Table 6: PMI distribution by platform, 2007 (%)
Table 7: PMI distribution by platform for consumers who did not arrange their policies via employers, 2007
Table 8: Top 10 UK PMI advertisers, 2005-06 (£)
Table 9: Top 10 UK PMI advertisers' spend by medium, 2006
Table 10: Top 10 UK PMI insurers by market share, 2002-06
Table 11: Top 10 UK PMI insurers by premium income, 2002-06 (£000s)
Table 12: Top 10 UK individual PMI insurers by market share, 2002-06
Table 13: Top 10 UK individual PMI insurers by premium income, 2002-06 (£000s)
Table 14: Top 10 UK group PMI insurers by market share, 2002-06
Table 15: Top 10 UK group PMI insurers by premium income, 2002-06 (£000s)
Table 16: Factors affecting future PMI GEP, 2007e-12f, scenario one
Table 17: UK PMI subscriber forecast, scenario one, 2002-12f (000s)
Table 18: UK PMI average premium forecast, 2002-12f, scenario one (£)
Table 19: UK PMI GEP forecast, scenario one, 2002-12f (£m)
Table 20: Factors influencing the size of the UK PMI market, 2007-12, scenario two
Table 21: UK PMI subscriber forecasts, 2006-12, scenario two (000s)
Table 22: UK PMI average premium forecast, scenario two, 2002-12f (£)
Table 23: UK PMI GEP forecast, 2006-12, scenario two (£m)
Table 24: UK advertising expenditure by media, top 10 highest spending private medical insurers, 2005 (£)

List of Figures

Figure 1: GEP increased for both individual and group PMI in 2006 in the UK
Figure 2: The number of group and individual PMI subscribers increased in 2006 in the UK
Figure 3: The average premium rose for individual PMI policies but fell for group policies in 2006 in the UK
Figure 4: Both the underwriting result and NWP improved in 2006 for the UK health insurance market
Figure 5: Private medical insurance was the most popular type of health insurance in 2007
Figure 6: Most consumers without PMI are not interested in buying cover in the future
Figure 7: Many consumers without PMI think that this insurance is too expensive
Figure 8: Uptake of PMI is highest among consumers aged 45-54
Figure 9: PMI update rises in line with the household income of consumers
Figure 10: Most consumers with PMI arranged this cover via employers in 2007
Figure 11: The importance of employers in distributing PMI peaks among consumers aged 25-34
Figure 12: Employers paid all or part of the premiums for most consumers with PMI in 2007
Figure 13: The telephone was the most popular means of arranging PMI for those that did not arrange cover through their employer in 2007
Figure 14: BUPA was the largest PMI advertiser in 2006 by a significant margin
Figure 15: Most UK PMI advertisers focus their efforts on direct mail and television campaigns
Figure 16: BUPA and AXA dominated the UK PMI market in 2006
Figure 17: BUPA and AXA dominated the UK individual PMI market in 2006
Figure 18: BUPA and AXA dominated the group PMI market in 2006
Figure 19: The number of group PMI subscribers is forecast to grow in scenario one
Figure 20: Average premiums are forecast to grow fastest in the individual market in scenario one
Figure 21: The group PMI market is forecast to outgrow the individual market in scenario one
Figure 22: Both individual and group subscriber numbers are expected to grow in scenario two
Figure 23: The average premium growth forecast in scenario two for the individual line is lower than in scenario one
Figure 24: Individual PMI will outgrow group PMI in scenario two

UK Private Medical Insurance 2007

Table of Contents

List of Tables

List of Figures