Surging PMI market faces challenges from self-pay and rising claims costs

The UK private medical insurance (PMI) market is seeing considerable growth in customer interest, including from populations who may not have previously been interested as NHS waiting lists continue expanding.

However, the market is also facing challenges and growing pains with increasing usage and rising premiums alongside the rise of self-pay for treatment, the Health & Protection Roundtable in association with Vitality heard.

There was universal recognition from those gathered at the Citizen M hotel over-looking the Tower of London that the market was growing strongly.

However, participants also noted there was a need to further educate consumers and employers about PMI and how they could use it.

“It’s quite interesting, from an AMII perspective and an advisory perspective, when you’re having conversations with consumers, their perception around the underwriting,” said Association of Medical Insurers and Intermediaries (AMII) general secretary and director of Fidelis Health UK Tina Jennings.

“They think ‘I’ve got this, so if I get insurance, I’ll be okay’. It’s incredibly naive, but there’s an element of that and so education needs to go on there.

“Quite how we do that, I don’t know, but I don’t think it’s solely the responsibility of the advisory market.”

A decade to turn around
Jennings also noted that while the NHS was managing to maintain service around critical issues quite well, to do so it was having to compromise on primary care and some elective surgery.

“That in itself has quite a snowball effect into small businesses, so they are looking to have policies in place and they are making provision for that because they realise there is a medium to long-term gain from that,” she continued.

“Yes, it’s a short-term increase in costs, but they know the challenges with the NHS are not going away any time soon, and to turn the NHS around there needs to be some radical change.

“But even if the current status quo continues, you’ve got at least 10 to 15 years before this kind of plays its way through,” she added.

The focus on employee health and wellbeing was also recognised in the larger corporate space, with the driver coming from managers and employees.

“Post-pandemic, employee health has become much more prevalent in a corporate’s mind, but I think also much more prevalent in an individual’s mind; employees are becoming far more demanding, they’re expecting employers to do more,” explained Aon principal Rachel Western.

Who is buying?
And while the growing numbers of insured people were welcomed it was highlighted that the market still only covers around 9% of the population.

“That’s a big challenge when affordability is going in the wrong direction,” explained ActiveQuote head of sales and operations Rod Jones.

“I think there’s a challenge in the market and one of the things we’ve always got to look at is who are the customers that inquire but don’t buy?

“What we’ve seen quarter to quarter is the biggest growth in the market is from 25 to 34-year-olds, which people may believe is because they are now more aware of PMI and that it’s more important.” However Jones noted this was due to a ceiling being placed on older demographics because many are already awaiting treatment and have pre-existing conditions.

“Although you can provide insurance for them, they want to get the current issue sorted so are going down the self-pay route and they are thinking it is already too late,” he continued.

“So we want to try and say take out insurance to capture the other things that may occur. But when they’ve got a problem and need to sort it the other stuff then takes a back seat, so that’s the other driver for the young demographics growing.”

Self-funders the priority
The increasing numbers of people choosing to self-fund their treatment was highlighted by several attendees with recognition of a change in attitude across practitioners and facilities.

With self-pay becoming more of a focus by some hospitals and consultants as they have more control over their fees, this raised fears it could lead to a two-tier system within the private sector.

“We’re seeing consultants take out national newspaper adverts for the first time this year,” said IHC senior consultant Paul Roberts.

“In one there was a 16-page supplement just full of consultant adverts, the first time I think I’ve ever seen that in the UK. That’s that is a step change for the market.”

Aon’s Western agreed, adding: “I think we could start seeing corporates paying big premium increases, buying private medical and then start seeing delays in that treatment that then kind of counter-argues some of the reasons they put it in place – I think that’s a big risk for us.”

People expect to claim on their PMI
Underpinning much of this is a rapidly rising claims and use of PMI products as individual and corporate policyholders now expect to use their cover.

With NHS GP services particularly stretched or inaccessible, for many people a virtual or remote GP service is the first stop on their health journey.

And having entered via a private GP, they are increasingly likely to be referred for private onward diagnosis or treatment, increasing costs and filling appointments, when previously there may have been suitable NHS care available.

“More than ever, what we’re seeing is an expectation that people are going to claim on their PMI and I think in the past that wasn’t as much the case,” said Vitality chief editor Adam Saville.

“People were expecting to have it there for peace of mind and the NHS would take care of everything else, but I think the product as a result, has had to reflect and move with that.”