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Healthcare insurance trends set for U-turn

The number of people with individual private medical insurance has fallen by more than 12 per cent between 1997 and 2002 but group PMI has grown and critical-illness cover has steamed ahead but this trend could soon be reversed, says Datamonitor.

It puts the decline in individual PMI sales down to the cost of the average policy rising by 54 per cent in five years.

Sales of individual CI policies topped one million in 2002, up by 29 per cent on 2001.

But Datamonitor predicts this situation may be reversed in the near future as CI sales drop due to premium increases, while new and more affordable PM using high excess and shared responsibility come on to the market.

The research shows that 6.7 million people had PMI cover at the end of 2002, including group and individual policies, with the total number of lives covered since 1997 having grown by 604,000. Datamonitor attributes this to the 4 per cent growth in the group market as there were 257,000 fewer people covered by an individual policy in 2002 than in 1997, equating to an average decline of 2.5 per cent a year since then.

ABI head of health insurance Richard Walsh says: “Employers are becoming increasingly aware of the benefits of offering PMI to staff. This is reflected by the 27 per cent rise in the number of group PMI schemes between 1997 and 2002.”

Datamonitor financial analyst Fiona Regan says: “The potential market for critical-illness cover is considerable and providers need to increase consumer awareness.”

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