PMI: Premium inflation could make the cover unaffordable for the majority
Rising private medical insurance (PMI) premiums pose a "bigger threat" to the sector than future improvements to the NHS, according to speakers at Laing & Buisson's annual private healthcare insurance conference.
Opening the debate, Philip Blackburn, market analyst at Laing & Buisson, said the only reason the PMI market has continued to grow is due to increases in average cost, with the same customers paying more and more for their premiums, and not growth in new business.
Commenting on this, Fergus Kee, managing director of BUPA Insurance, said delivering affordable healthcare is the industry's biggest challenge.
"We need to tackle premium inflation as customers will not keep on paying more and more for their cover.
"Although we need to demonstrate points of difference between what the NHS offer and what private medical insurance offers following the improvements made to the public health service, we also need to slow the rate of premium increases and make medical insurance more affordable," Kee said.
He added that the industry needs to work together to achieve this. "We cannot just accept medical inflation as a given and simply continue to pass it on to the customer. The only way to address this fundamental issue is for insurers, hospitals and consultants to work together."
Bringing up another issue compromising the PMI market, Dr Mike Goldsmith, deputy chairman at the Commercial Occupational Health Providers' Association, argued that expensive anti-cancer therapies would eventually "kill PMI" as they would make the cover unaffordable for the majority.
Agreeing with Kee, Dr Goldsmith said price rises must be stopped. "If we do not control the cost, the consumer market eventually will," he said.
Also speaking at the conference, Graham Boffey, managing director of Norwich Union Healthcare, said while the industry needs to respond to the challenges created by an improved NHS and increased premiums, there are still plenty of opportunities in the PMI market.
"The reality is that the NHS will not be all things to all people and there will be gaps and we can capitalise on this," he said.
Looking ahead, the majority of the speakers believe product innovation is one way the PMI sector could expand. Blackburn suggested that WPA's new product for short-term cover could potentially open up a new market, while Shaun Matisson, chief executive of PruHealth, argued that the provider's lifestyle PMI, which rewards policyholders leading a healthy and active life, could provide the market with the push it needs.
