Private medical insurance premiums increased by over 50% between 1997 and 2002 while policy take-up ...
Private medical insurance premiums increased by over 50% between 1997 and 2002 while policy take-up fell by an eighth in that same time, suggests the latest findings from Datamonitor.
Analysis of financial services policy sales in the health market indicate - in UK health Insurance 2003 report - that the average cost of individual PMI policies has increased by 54% in five years to 2002.
Around 6.7m people held PMI policies at the end of 2002, thanks mainly to the group protection market, yet there were 257,000 less people (12%) covered by an individual policy last year so the market's annual sales seem to fall by approximately 2.5% in those five years.
That said, the sale of critical illness policies may be replacing the selection of PMI policies, suggests Datamonitor, as their sales have topped the 1m mark.
Based on this evidence, it is likely that each individual, over the next few years, will come into contact with someone who owns a critical illness policy.
However, CI policy take-up may eventually fall too, suggests Fiona O'Regan, financial analyst at Datamonitor, as premiums are slowly increasing in this market too and new forms of PMI are emerging.
According to the Datamonitor statistics, part of the problem is the average individual PMI premium is twice as expensive as the average group premium - rising from £789 in 1997 to £1218 in 2002.
Consumers see PMI cover as simply too expensive to hold, so insurers have had to resort to developing high excess policies or "shared responsibility" - where the policyholders and insurer share the cost of the treatment, up to a maximum amount, and get more of a say in the treatment they receive.
It is the development of new products - such as the idea of leaving small medical treatments to be paid for by the policyholder - that might resurrect interest in PMI policies, says O'Regan.
Contact Datamonitor to purchase a copy of the UK Health Insurance 2003 report.
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