The year 2025 may be remembered as a turbulent year of two halves for the private medical insurance (PMI) market.
Companies and individuals continue to see the attraction of taking out cover as NHS wait times stay stubbornly high.
But so too does medical inflation – even if there are some signs this is easing.
New business has become harder to convert in the second half of the year as employers and individuals wrestle with increased costs leading to a greater emphasis on bang for their buck.
Game of two halves
“It has been a game of two halves,” Tim Maloney, head of client development at Towergate Employee Benefits, tells Health & Protection.
“The first six months showed a continuation of growth in the marketplace from 2024, with the second part showing a slowing of growth, as national insurance contribution (NICs) increases had an impact, and confidence in the economy dipped.”
Against this backdrop of more cost conscious employers, it is perhaps no surprise that the cash plans market has performed well.
Paul Gambon, chief commercial officer at Medicash, says: “We saw a particularly strong first half of the year, with a lot of momentum coming through from employers who were still prioritising affordable workforce wellbeing and looking to expand their benefits provision.”
But even this market is not immune to the NICs increases.
“The second half of the year has definitely softened,” Gambon continues.
“The increase in national insurance contributions has had a tangible impact on employers’ budgets, and we’re seeing some of that discretionary spend paused or pushed back.
“As we got closer to the Budget, many prospect customers were understandably nervous about committing to additional expenditure given the uncertainty of what was to come, but hopefully that fear should now have been addressed and we’ll see a release of pent-up demand from the end of 2025.”
All of these factors are having an interesting impact on sales, Gambon adds.
“Interestingly, while new virgin sales have slowed in line with this wider caution, switch business has remained broadly stable because that spend has already been allocated. So, overall it has been a strong year, just with a noticeable change of pace as we moved into the latter months,” he says.
Strong demand
But the underlying reasons behind growth in sales have not changed.
Charlie Cousins, director at Engage Health Group, says: “We’ve seen strong demand from micro and SME businesses, driven largely by growing concern over NHS waiting times, keeping overall lead volume strong.
“While conversion levels have remained steady, there’s been a clear shift away from tech and venture capital-backed start-ups which have traditionally been core sectors for us and towards more traditional industries seeking faster access to care.”
James Henderson, sales and marketing director at Simplyhealth, reports costs of claims are increasing at the same time discretionary spend for employers is getting squeezed.
“That said, with no meaningful shift in NHS performance, notwithstanding welcome investment in the NHS, the market is expected to grow,” Henderson says.
As a result, he points to more concern on price from customers.
“There is a greater focus on price with renewal pricing being more difficult to put through and a greater appetite for lower-cost options for cover – with more focus on flexible vs funded schemes to control costs to the employer,” Henderson continues.
“In the cash plan market there is more focus on benefit pot sizing compared to the cost of living and inflation to ensure maximum member benefit,” Henderson adds.
Managing costs and medical inflation
David Bourne, market development leader at Mercer Marsh Benefits (MMB), maintains 2025 has been a turbulent year for the health insurance market in the UK.
“With a number of challenges ranging from the ability to manage escalating drug and treatment costs, clients are looking for new and innovative ways to provide for their employees’ health needs,” Bourne says.
“Clients have also had pressure on budgets since the changes to NICs. This has meant providers in the healthcare market have had to walk a thin line between affordability and innovation.
“For the PMI providers specifically, escalating claims within musculoskeletal (MSK) and mental health has led to the development of more affordable solutions to counter the impact of medical inflation on premiums.
“Although medical inflation itself is seeing a downward trend, there is still a degree of mixed views as to whether it will drop below double digits this year or not.”
Indeed, according to Ally Antell, distribution director, Aviva UK Health, intermediaries and providers are doubling down on cost containment as customers look for flexible options tailored to their healthcare needs and budgets.
“Innovation in value-based healthcare and the supply chain will be critical,” Antell adds.
“Focus on prevention and early intervention is still prominent, although proving outcomes and material cost savings remains a challenge. At Aviva we seek those interventions which improve the customer journey, allow individuals to access care more quickly, and drive better health and financial outcomes.”
Picking up on this trend, Dr Ali Hasan, commercial director at Axa Health, reports that good value and the return on investment remain key considerations when purchasing PMI.
“Speed of access to care remains the critical driver for purchase,” Hasan notes.
“We continue to focus on supporting members to access care rapidly. For example, we have seen continued growth in our online outpatient services as a route to quicker diagnosis and treatment.
“This is an area where we’ll continue to innovate, finding new and better ways to meet the evolving needs of our members.”
Customer satisfaction
The good news is that customers satisfaction has climbed as providers prove more responsive to their needs.
Tim Hogg, director at consumer group Fairer Finance, says: “We’ve seen some positive movements in the PMI market over the past year.
“In our quarterly poll of 10,000 customers, claims satisfaction has improved, and in our mystery shopping of PMI purchase journeys, we’ve found that insurers are more transparent compared to last year.
“However, consumer trust, happiness and perceived value-for-money remain stubbornly flat compared to a year ago.”
But providers are alive to these cost concerns.
Oliver Jones, commercial director at National Friendly, says: “NHS pressures have accelerated demand for private health insurance as clients seek faster access to treatment.
“However, rising treatment costs have pushed premiums higher, creating affordability barriers that prevent many from entering the market.
“This gap is precisely why we recently launched Friendly Health – to provide an accessible alternative for those who find traditional health insurance products financially out of reach.”
Continuation options and personal action
But if clients can be reached at work, there are signs they will want that cover to continue.
Poonam Khan, head of private health insurance at LifeSearch, tells Health & Protection: “One of the biggest shifts is the number of people exploring continuation options after leaving an employer scheme, whether they are retiring, changing jobs, or simply losing access to a company paid benefit.
“Customers are far more aware that they can take that cover with them, and it has become a much more frequent conversation for us.
“You don’t have to just agree with the continuation price with the current insurer, which is usually quite high, it’s possible in many instances to switch providers, keep medical history cover, and pay much less.”
That trend towards people taking greater responsibility for their own health does not just extend to paying for cover.
“More than ever, individuals see how personalised actions to improve health and wellbeing can positively influence long-term outcomes and give regular tangible value from health insurance,” VitalityHealth CEO Arun Thiyagarajan tells Health & Protection.
“The natural next step is providing personalised health support, aligned to risk factors, lifestyles and conditions – we’ll be delivering exactly this to our members in 2026 linked to our partnership with Google.”
Unpicking legacy benefits
But as premium rises ease, some customers find themselves falling between two stools – that of full fat private and medical insurance and cash plans.
Gavin Shay, distribution director at Equipsme, says: “While PMI price rises have stabilised, we’re still seeing businesses baulk at this year’s rises on top of last year.
“Affordability and sustainability are huge concerns for companies of all shapes and sizes – and are clearly driving change within the group market.
“A lot of our supporting distributors tell me they are conducting widespread reviews to unpick legacy benefits and multiple services, and redistribute budgets more equitably.”
And Shay says Equipsme has seen a huge amount of growth over the last 12 months.
“We continue to see clients cancelling their PMI and re-setting to cover more employees, as well as those completely new to group health insurance looking to buy for the first time,” he adds.
A key factor behind prices starting to stabilise is that medical inflation is finally coming down.
Luis Weston, associate director, health and benefits GB at WTW, says: “Medical inflation is reducing and is much lower than previous years, which is due to incidences broadly stabilising across the market.
“Yet despite stabilisation on the whole, there is high demand for musculoskeletal and mental health services and increased severity for cancer, which is leading to higher cost of claims in this area.”
Cancer costs
Kelly McCabe, co-founder of Perci Health, tells Health & Protection that cancer remains the biggest cost pressure in health and protection insurance.
“We’re seeing a clear shift toward prevention, early detection and nurse-led navigation as core cost-mitigation tools,” McCabe says.
“With some PMI products starting to limit elements of cancer cover, employers and insurers are turning to wrap-around services that plug gaps in NHS pathways and support members through complex transitions.
“Rising diagnoses in younger adults and the growing burden on carers are also driving demand for more comprehensive, whole-pathway support.”
In terms of how providers have responded to customer demand in 2025 and into the future, Kristian Breeze, director of healthcare at Ascend Broking Group, points to digital solutions.
“Providers are responding with technology-led propositions such as virtual diagnostics, AI-driven triage and personalised wellness pathways,” Breeze says.
“These developments are not gimmicks; they are becoming the differentiators in a market where speed and convenience matter as much as price.
“The challenge for advisers will be to balance these innovations with clarity and trust. As products become more complex, the human element of guidance, reassurance and advocacy will remain irreplaceable. In a sector defined by care, that may be the most enduring trend of all.”
Also expanding on his expectations for 2026, David Booth, sales adviser at Santé Group, adds: “There will be continued growth in digitally-enabled health solutions, especially those offering early intervention and case management to reduce claims.
“There will also be further expansion of lower-cost, modular products, reflecting employers’ budget constraints and desire for wider employee coverage.
“We can expect increased employer focus on mental health, MSK and women’s health, driven by workforce trends and increasing absence rates.
“And there will be more data-led conversations, with advisers helping clients track utilisation and outcomes to demonstrate value.”
