PMI: Increase in group PMI sales offsets decline in the individual market
The Association of British Insurers (ABI) has bitten back at Datamonitor's bleak findings that individual private medical insurance (PMI) sales are dramatically falling.
Datamonitor's latest report reveals that sales of individual PMI decreased by 12% between 1997 and 2002. The market analyst put spiralling sales down to recent hikes in premiums - claiming the average cost of an individual policy has increased by 54% in five years.
However, the ABI insists this trend does not mark a fallout of policyholders, but shows ind-ividuals are simply swapping to cheaper, group schemes.
"Employers are becoming increasingly aware of the benefits of offering PMI as an employee benefit," said Richard Walsh, head of health at the ABI.
"This is reflected by the 27% rise in the number of group PMI schemes between 1997 and 2002. As a result, the overall number of people covered by PMI continues to grow."
Datamonitor compares falling individual PMI sales to the increase seen in individual critical illness (CI) policies - new sales reached one million last year. However, it notes the fortunes of the two products could be about to change. More premium hikes are predicted in the CI market, whereas the surge of low-cost, high excess PMI policies is likely to increase.
Most PMI providers now offer a high excess option, with an element of self-pay. It is hoped this new wave of products will not only help cut costs for policyholders but, because cost is shared, it may also reduce claims over time.
Fiona O'Regan, financial analyst at Datamonitor and author of the report, said these products offer the best opp-ortunity to grow the individual market.
"This will take time and initially growth levels will be slow," she said.
