By Rachel Williams Premiums for comprehensive PMI rose by nearly 10% this year, while budget plans s...
By Rachel Williams
Premiums for comprehensive PMI rose by nearly 10% this year, while budget plans saw a bigger hike of over 11%.
According to the COVER PMI survey 1999, a 35 year old male will now pay on average around £90 a month for comprehensive PMI, based on a comparison of plans featured in the 1998 and 1999 surveys.
However, this average hides a large number of variations. The biggest hike came from Clinicare's Carte Blanche plan which rose by 15% while its Classic plan, the NUH Express and Select Care plans, as well as Prime Health's Prime Care plan, all rose by 11%.
BCWA's Preferential plan saw the smallest increase at just 4%. While price increases were less than last year - which saw premiums rise by an average of nearly 12% on average - the hikes mark a continuing trend of rising premiums. A 35 year old male will now pay on average £26.17 a month for budget cover and where a choice is available in a B and C band hospital.
The plan seeing the biggest hike was PPP's Starter plan at 20%, followed by Norwich Union Healthcare's Trustcare Starter and Personal Care Plans, both of which rose by 16%.
At the other end of the scale Clinicare contained increases to a more modest 5.6%. BCWA, meanwhile, did not increase premiums at all on its Vital plan. BUPA and OHRA declined to provide premium details.
Stephen Walker, principal of Medical Insurance Services, is calling for improved underwriting on PMI policies in the belief that insurers have an unrealistic picture of the risk they are taking on, leading to inflated private medical insurance premiums.
He said: "I do not think the industry is doing a very good job of risk assessment. Insurers are taking on unnecessary risks which triggers unnecessary costs and, somewhere along the line, this will be translated into higher premiums for policyholders."
BUPA, for example, asks five questions during the underwriting process and does not ask for details of any medical conditions suffered more than four years prior to joining, with the exception of long-term conditions.
PPP healthcare asks customers for details of any medical treatment or advice received in the last five years and any other health problems.
Walker believes insurers do not use full medical questionnaires because it would deter many applicants.
He said: "Insurers have taken on board many problems and are now having to look at other ways of controlling costs."
Geoff Brown, chief actuary at BUPA, said that its degree of underwriting is appropriate to its pricing method.
"PMI underwriting is less comprehensive than the levels used for life cover, however this is due to the nature of cover. Age is usually the only rating that is applied.
"While we do ask only a limited number of questions, where applicants answer 'yes' they do provide additional information which can then lead us to seek a medical report."
See survey starting on page 37
