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AMII AGM 2019: What next for brokers with industry at the crossroads?

World of medical insurance becoming 'more blurred’, analyst says

Will the latest private medical insurance (PMI) trends depress or uplift members of the Association of Insurers & Intermediaries (AMII)? That was the question behind the contribution of Ted Townsend, strategy consultant in private healthcare at LaingBuisson, when he addressed this year’s AMII AGM in Milton Keynes.

It is all made more complicated because in PMI, the insurer is the provider while elsewhere providers are hospitals and primary care units.

“But,” he said “everything is getting more blurred.”

Reeling off statistics from his company’s latest market study, he said PMI covered 10.4% of the population with corporates accounting for 77% of total plans. Individuals made up 23% of policies but paid 38% of premiums.

London and the South East remain private health hotspots “so you need to be there” but while the UK churn rate remains high, lapses have fallen from a peak 25% in 2002 to 17.6% now.

Townsend said: “The heyday of PMI growth was in the Thatcher period. The market hit a high in 2008 and is down 10% since with a disconnect between full time employee numbers and market gains. The problem is half of large companies now self-insure – good for them but not so great for those selling insurance.”

The big problem for insurers was how to keep costs down.

He said: “Margins are creeping up to 26.1% at the gross level but net, insurers say they are seeing a fall. Oncology is growing very fast but although it is only one in twenty five cases by volume, it accounts for a quarter of the total spend. There are more and more drugs and surgical is actually falling. But cancer survival rates could prove toxic for insurers due to the significant costs of continuing treatment.”

Townsend listed “issues”. These included insurance premium tax, insurers paying for NHS care, governance costs, the backlash in the wake of the scandal around the disgraced surgeon Ian Paterson, consolidation in claims management and the potential for Brexit to force some large London employers abroad. The fall in oil prices has deprived premium London hospitals of many middle eastern patients although there has been an overall growth, partly from South Korea and Thailand.

But there are opportunities. Townsend cited the bundling of some primary care into PMI, remote GP access, earlier tests and interventions, and lifestyle changes.

He said: “There’s a cultural change in the NHS towards taking in more private money although self-pay in the sector is not taking off as once predicted although hospitals are getting better at selling high price interventions.”

“There is only one – usually unasked – question that really motivates employer schemes. When will that employee get fit enough to return to work?”