Summary

The health and medical insurance market is expected to register a healthy CAGR of 5.05% during the forecast period (2021-2026). The market for private healthcare services is projected to reach USD 13.8 billion by 2025 due to the rise in NHS waiting times and referrals to the private sector. Health cover has become the highest public priority. Healthcare is most frequently cited, by voters, as the most important aspect of government spending. The NHS has, thus, become a protected department, with the awareness of all political parties about NHS spending on the overall health coverage. According to the data published by the Association of British Insurers (ABI), 1.7 million people in the United Kingdom had private medical insurance (PMI). The NHS across the United Kingdom spent nearly £159 billion in 2018/19. This is equivalent to GBP 2,300 for every person in the UK and represents 7.1% of the UK GDP.

Healthcare UK also helps the NHS to fulfill its important role in international health development. Through the Prosperity Fund’s ‘Better Health Programme,’ the UK is supporting eight middle-income countries to strengthen their health systems as they progress towards achieving universal health coverage.

Throughout the United Kingdom, there is a coexistence of public hospitals, private non-profit hospitals, and private for-profit hospitals. While hospitals are mainly publicly owned and independently operated, they are organized as hospital trusts with three hierarchical levels: community hospitals, district hospitals, and regional or inter-regional hospitals, as well as a number of specialized hospitals offering advanced treatment. In line with the EU average, health services are predominantly financed from general taxation.

The industry currently boasts a total annual turnover of over GBP 70 billion. Around GBP 30 billion of this is made up from exports, meaning the demand for an international supply of British life science goods and services continues to thrive. Health businesses who choose Britain for their life sciences ventures will find they have access to widespread financial opportunities through the City of London and venture capital community.

Key Market Trends

PMI Gaining Huge Market Amid the Uncertainties Surrounding Brexit

Private Medical Insurance – medical cover subscribers comprise 11% of the population. Total spending on the UK private medical cover, which includes insured and self-insured healthcare trusts, grew by 2.8% in 2015. Unlike other countries where the government and private providers see one other as competitors, healthcare in the United Kingdom is free and mostly compensated by the taxpayer. In the United Kingdom, public-private health care complements one another. Consumers generally opt for private health care only if they need specific conditions or rare conditions that might not be included in the public health care program.

Significant developments in premiums belie the underlying trends in demand. Factors driving the apparent shift in attitudes include improved levels of satisfaction with NHS, increased public healthcare spending, and deterioration in labor market conditions. The consumer shift away from private medical insurance is unlikely to be fully reversed.

A recent economic recovery may improve wage and employment conditions wherein NHS reforms are expected to push for the role of the private healthcare and insurance sector, while United Kingdom's evolving demographic profile may increase the strain on the public healthcare system.

The current volatile economic scenario does not prescribe continued growth in the category. However, the demand for lower-cost policy coverage has propelled growth in the popularity and availability of cheaper healthcare cash plans and self-pay options for one-off treatments.

Spotlight on the Employee Sponsored Health Coverage in the United Kingdom

NHS has always ensured that the United Kingdom maintains an extensive social security system. The UK economy has a problem due to its present political crisis. However, it possesses robust economic growth, with low inflation and low unemployment rates as a huge plus. Employers consider health and wellness as a prime objective in providing health benefits to their employees. In the United Kingdom, up to 45% of the employers aim to include the health and well-being of employees in their company goals within three years of the company's formation. With rising income-producing employers and growth in the awareness of the extensive health coverage offered, this segment is expected to exhibit prominent growth during the forecast period.

The UK employees receive fundamental health and retirement coverage via government programs and gain wide access to a well-established financial services industry, which offers consumers a broad set of choices in private health care, insurance, and investment products. Due to the availability of these resources, workers in the United Kingdom express far less concern than the US employees regarding financial issues ranging from having enough money to live on (44% of UK employees, as compared to 59% in the US) to being able to afford relevant health insurance for self and one’s family (28% in the United Kingdom and 57% in the United States).

Competitive Landscape

In spite of being a concentrated market, lack of competition among private hospitals has constrained insurers the bargaining power, thereby resulting in inflated claims costs. Coupled with the reduction in customer numbers, this has been the biggest driver for premium growth, as insurers responded to the burden on profitability by raising prices for customers.

The consumer shift away from private medical insurance is unlikely to be fully reversed. Favorable forces may support a modest CAGR of 2% for gross written premiums over the forecast period (2013–2017).

A recent recovery in economic growth may improve wage and employment conditions in the United Kingdom. Also, NHS reforms are expected to advance the role of private healthcare in the insurance sector. On the other hand, the United Kingdom’s evolving demographic profile may increase the strain on the public healthcare system.

Bupa continues to be the market leader in the UK health and medical insurance market, holding more than 50% of the market share. Its annual revenue from the health insurance business segment accounted for more than 80% in 2017.

The market concentration is ‘high,’ as it is dominated by four companies, BUPA, Axa PPP, Aviva, and Prudential, which contributed a cumulative market share of greater than 90% in 2016.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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