PMI: Cheaper products fail to woo consumers as market suffers drop in sales
Sales of individual private medical insurance (PMI) dropped last year despite the introduction of new low-cost PMI products, Datamonitor has revealed.
According to the market analyst, sales of individual PMI fell from 1.129 million in 2001 to 1.012 million in 2005 - a drop of more than 10%.
Datamonitor believes price is the main factor behind the gloomy statistics, with premiums increasing by a compound average of 6.5% each year over the same period.
James Dieppe, the firm's financial services analyst, commented: "Like the NHS, insurers are suffering from the ill effects of high medical costs. Providers had hoped to turn the fortunes of the personal sector around, principally by redesigning products and meeting changing consumer demands with lower-cost policies. Unfortunately, this has not materialised and insurers interviewed by Datamonitor seemed more pessimistic about the market this year."
The firm thinks this trend is likely to continue in 2007 and 2008, and forecasted that policyholder numbers in the personal sector will continue to fall by an annual average rate of 3% between 2006 and 2011.
