For the first time in a decade, the number of people taking out private health insurance in the UK has increased significantly. The reason for this rise is due to consumers fearing what could happen with the NHS crisis. In 2015, the demand for private insurance rose by more than two percent. This is after a steep fall between 2008 and 2011, while the rate stayed flat between 2012 and 2014.

People Are Dissatisfied with Long Waits

People Are Dissatisfied with Long Waits
Economists say that the significant increase in private medical insurance (PMI) purchases has everything to do with the increased restriction on NHS treatment as well as the higher waiting on the NHS. Customers are also attracted by the broad selection of policies at various price points. Increases in insurance premium taxes have done nothing to stem the increased PMI sales. Since 2008, the premium tax has gone up from 6 percent to 9.5 percent, thus making policies more expensive.

In 2008, the medical insurance industry experienced its peak when 12.4 percent of the UK, or 4,350,000 people, had PMI. But, after the 2015 growth, 10.6 percent of the population had PMI, or 4,022,000 people. Company schemes are the source for all of the growth in PMI. More than three out of four people covered by private insurance get it through their work.

In 2015, 3,070,000 workers had PMI, an increase of 3.4 percent. When you examine these numbers, the cause may be less about the NHS crisis and more about companies taking on more staff and a recovery in the economy. On the other hand, individual PMI subscriber numbers dropped to 952,000, a decrease of 1.7 percent.

Independent Coverage Is Too Much for Most

The idea of buying independent cover has put off most consumers. It costs around £650 per year on average for healthy adults who are 35 years old. But, the prices rise drastically at ages when claims are more likely. For instance, 70-year-olds can expect to pay £2,300 per year.

The private hospitals and companies offering cover are experiencing bumper profit margins according to data from LaingBuisson. The value of insurance claims in 2015 was £3.6bn, while the individuals and companies spend £4.7bn on PMI. That means that providers profited by £1.1bn. The estimated gross PMI profit margin for 2015 was 26.7% according to the data, which was an increase from the 25.9% profit in 2014. But, 2017 may end up being a difficult year because of Brexit and further tax hikes.

The future of private medical insurance is more uncertain than ever. In June of 2017, there was an insurance premium tax hike to 12 percent, the effects of which we are yet to understand. And, of course, no one knows what the UK’s exit from the European Union will bring.

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