In May, the Association of British Insurers revealed that corporate private medical insurance (PMI) ...
In May, the Association of British Insurers revealed that corporate private medical insurance (PMI) sales had increased from 2,614,000 in 2004 to 2,665,000 in 2005 - a great achievement in a year when all other sectors in the health insurance and protection markets failed to see sales grow.
This is certainly a positive step forward for the group PMI sector after suffering years of stagnant sales. However, despite this sales growth, some providers are now starting to hike premiums.
Take Bupa, for example. In a statement to IFAs, the provider revealed that it will increase the medical inflation factor from 9.75% to 10.95% for all experience-rated clients who renew from 1 October 2006. From the same date, Bupa's Premier Network discount will be reduced from 5% to 3% for all new and renewing business.
So why is this happening when sales are growing? The cost of new, expensive drugs seems to be the main culprit, as more members use their cover to claim for higher-cost treatments like Herceptin.
And Bupa is not the only one affected by escalating treatment costs. In an article in this month's COVER, Axa PPP Healthcare's head of medical policy Dr Gary Bolger admits that funding ever more expensive drugs is the real problem facing the PMI sector.
In order to continue to offer consumers good quality cover while at the same time keeping the cost low, the industry has to find a balance between affordability and the availability of comprehensive cover. This is the challenge PMI providers have to tackle. Offering a wide range of cover is likely to be the best solution.
Johanna Gornitzki, editor
