Private health cover market tops £6 billion in 2020
LaingBuisson has today launched the 17th edition of Health Cover UK Market Report.
The value of the UK private health cover market reached an estimated £6,173m in 2020 (2019: £6,073m), helping to pay for private medical treatment, health cash plan benefits and dental treatments.. The figure is stated gross of rebates that many insurers gave to customers to compensate them for lower claims due to Covid disruption.
Private medical cover
The largest segment by far was Private Medical Cover, at £5,018m, mostly earned in the form of traditional private medical insurance (PMI) premium income, with the remainder made up by non-insured medical expenses schemes run by larger corporate employers.
Private medical cover pays for about half of private hospital and specialist treatment carried out in the UK. Two-thirds of private medical cover is funded by employers as a benefit for their employees, and the remaining third is paid by individual PMI policy holders.
There were 4.1m private medical cover subscribers / enrolees at the end of 2020, marginally up on 2019. Including dependants, 7.1m people benefit from private medical cover, representing 10.6% of the UK population.
Health cash plans
Premium income for health cash plans, which help to pay for ‘low ticket’ health expenses such as visits to dentists and opticians, was estimated at £411m in 2020 (2019: £415m)
There were 2.3m subscribers and 3.3m persons covered, representing 4.9% of the UK population.
Subscriber numbers have been on a declining trend since peaking at the turn of the century. The decline was accelerated by the global financial crisis of 2007/08, though in recent years employer paid cash plan volumes have been rising strongly as individual purchasers have continued to fall
Dental maintenance and insurance
Dental maintenance plans, through which patients pay a fixed sum per year for their dentists to maintain their dental health, generated an estimated £605m in premium income for dental plan providers (2019: £601m).
There were 2.1m subscribers and 2.4m persons covered, representing 3.6% of the UK population.
Subscriber numbers have been on a slow declining trend since figures began in 2007.
Dental insurance, in contrast, has been rapidly growing from a small start, with premium income reaching £140m in 2020, with 663,000 subscribers, 953,000 persons covered (1.4% of the UK population) at the end of 2020.
The private health cover sector has been struggling to re-establish real terms growth since its expansion was halted in its tracks by the global financial crisis in 2007/08 and the ensuing recession. Sector sources indicate that there was some real growth in calendar 2021, the scale of which will be revealed when numbers become available, but a significant resurgence remains elusive.
Author of this year’s report, William Laing, said:
“Looking further forward, to calendar year 2022 and beyond, there are two opposing drivers in play. On the one hand, long waiting times and reduced access to NHS services, which will take several years to catch up with the Covid backlog, should strongly stimulate private health cover demand. But on the other hand the cost of living crisis, the Ukraine war and the uncertain economic outlook, will undoubtedly have a dampening effect. In the light of the uncertainties, no quantitative projections are offered by the report this year.”