Insurance sector professionals are seeing a pandemic bounce in demand for private medical insurance (PMI), but there is growing pressure to increase prices to offset demands on other parts of insurers’ business model.
Demand has “never been higher” in the words of one broker, as the public reels from a year-long health emergency that has had the added effect of highlighting the dangers of complications from co-morbidities, and the dire consequences of long waiting times.
Insurers, while benefiting from limited PMI claims due to the moratorium on procedures, will be hoping more demand for PMI will offset other heavy pandemic costs.
Aviva, Britain’s biggest insurer, paid out £1bn last year to life insurance, critical illness cover and income protection customers, its highest ever payout.
Of that, £682m went on life insurance, over 50s and whole of life plans, with around 2,150 claims for deaths due to Covid, the fourth most common reason for claims at 4.7%.
But with vaccine roll-out opening the floodgates to deferred private treatments, brokers are expecting PMI claims to rise, followed by premiums.
High costs may not defer new customers, think some insurers. “All private medical insurers are reporting a surge in sales of consumer PMI as the impact of the pandemic on NHS waiting lists becomes clear to the public,” says Brett Hill, distribution director at Towergate Health and Protection.
He adds that while company medical insurance schemes saw a reduction in membership in 2020, with many companies reducing their headcount in the face of economic uncertainty, “this trend is expected to be reversed in the latter half of 2021 and companies begin recruiting again in anticipation of economic recovery”.
Read more about this from the Financial Services Faculty at: How has health insurance been affected by the pandemic | ICAEW
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