Demand for health cover was solid in 2012 and the number of policies moved upward, according to healthcare intelligence provider Laing and Buisson.
The market saw a 1.1% increase in the number of policies to reach 4.033m at the start of 2013 the Health Cover UK Market Report 2013 found. This followed stable demand in 2011 when policies edged down very marginally by 0.1%, but a drop in policy numbers of nearly 8% during 2009 and 2010.
According to the report, the rise was driven by a shift towards self-insured medical expenses schemes (typically written under Trust) which offer large companies Insurance Premium Tax (IPT) exemption, and scheme flexibilities.
Of the 58,500 rise in company paid policies during 2012, equivalent to 2% growth, 35,700 were self-insured by employers, and 22,800 were insured.
Spending on (insured and self-insured) private medical cover increased during 2012 by 0.3% in real terms to £4.4bn, as the average price paid for private medical cover, estimated at £1,100 in 2012, was little changed in real terms over the year.
Commenting, author of the report, economist Philip Blackburn said: "At a time when the economy is struggling to grow at all, solid demand for private medical cover offers the industry a clear chink of light that growth is likely to move forwards."
In a weak UK economy, budgets have put pressure on individual cover demand. In 2012 the number of individual paid policies dropped by 1.5% - or 15,500 policies. However Laing and Buisson said this was levelling off in the near term.
Dr Damien Marmion, managing director of Bupa Health Funding said: "We are glad that employers continue to see the value of health insurance. We are also pleased that the market decline has halted, although it is still fragile and our customers continue to call for better value for money."
Blackburn said: "The strength of employer funded private medical cover is a positive, and a more modest decrease in individual demand provides optimism that the ‘worm could be turned' by insurers in this market area.'
He added that new products from insurers which suit a wider distribution of healthcare needs and healthcare budgets provide a ‘raised platform' for medical cover to penetrate further across all ages as more cracks in NHS performance are expected under its financial constraints."
However, claims costs ran ahead of premiums in 2012 in a year when there was a cranking up of cost containment initiatives by insurers.
Marmion concluded: "We are now in a period of stagnation and it is going to take a significant change for a return to good growth."
