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…but analyst says faith in NHS will restrict sales

A report from market analyst DataMonitor is throwing cold water on hopes of a sales boom by suggesting that the PMI market has reached its peak and future growth will come from increased premiums rather than further penetration.

The report predicts the market will not grow any further because of public faith in the NHS.

It claims the only way PMI providers are going to continue to meet their costs is to hike premiums.

DataMonitor points to the fact that premium prices have risen by 12 per cent a year since 1994 as proof of its theory. It says there will be continued significant price increases to keep up with rising costs.

Manager of international financial services Michele Gorman says: “Most health insurers recognise the fact they are not going to get much more penetration unless the NHS falls apart. The industry is hopeful they will be able to expand but I am doubtful they will be able to do so.”

Norwich Union Healthcare media relations manager Louise Zucchi says: “It is true to say premiums have increased significantly in recent years. PMI providers have to innovate to grow the market. It is tough to grow the market but not impossible.”

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In recent months, investors have become more pessimistic about both the European and the US economic outlook and yet stockmarkets have pushed on to new highs. Some would argue that this is a worrying divergence. We would take the opposite view. This appears to be classic bull market behaviour. A wall of worry has been rebuilt, and stockmarket resilience should be taken as a sign of strength. The market is discounting an improving economic outlook ahead, particularly in the south of Europe.

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