As the individual PMI market falters, company-paid group PMI take-up is rising
Demand for private medical insurance (PMI) is continuing to grow, according to Laing & Buisson's annual report. However, growth is concentrated in the group market.
The Laing & Buisson Private Medical Insurance UK Market Sector Report 2002 shows the number of people with PMI was up 1%, standing at 3,714,000 on 31 December 2001. This follows 3.5% growth in 2000 and flat demand between 1991 and 1999.
The rise in demand during 2001 was concentrated solely in comp-any-paid business, up 3%, as rates of individual PMI subscription continued to fall, down 2%. The financial performance of the PMI sector as a whole improved in 2001, particularly for corporate PMI.
Laing & Buisson economist Philip Blackburn, author of the report, said: 'Economic fundamentals remain favourable for PMI spending, particularly in the corporate sector, but further hardening of corporate prices, which occurred in 2001, poses a risk to future growth.'
He added: 'Moderation of premium increases for individuals in 2001 failed to halt the downward trend in individual private medical insurance demand, although the rate of decline slowed. Further moderation of increases might halt the trend.'
A total of 1.2% of the population is now covered by non-insured schemes, medical cover self-insured by employers. Demand for these schemes has grown rapidly in the last few years, with holders growing by 20% in 2001 alone, amounting to 398,000 more employees.
Blackburn said: 'Growing popularity of self-insuring private medical cover by companies, particularly schemes written to a trust fund and therefore exempt of insurance premium tax, is a key trend to emerge in recent years. This illustrates strength in demand for private medical cover by companies, even though self-insured schemes to a large extent displace traditional company-paid private medical insurance.'
Commenting on this trend, Nye Jones, distribution development manager at PPP healthcare, said: 'In its crudest sense these companies are exposing their whole capital to the cost of private medical treatment. Where there is an opportunity for us is a middle ground between no insurance and full insurance, through stop-loss cover.'
