Health cash plans have once again come out on top of the Financial Conduct Authority’s (FCA) general insurance (GI) value measures data.
Furthermore, the market increased in by 50,000 members or 2.1% while premiums increased by £20m or 4.9%.
The FCA data showed that in 2024 cash plans once again stood out for value for money and appeared at or near the top of many of the categories measured, although the results for dental insurance were more mixed.
However the regulator reiterated concerns about the value for money offered by other products in the market.
Performance across the sector was largely consistent from previous results which was a good sign for retail cash plans but did not meet the FCA’s aim to improve performances in other products.
Despite calls for improvement and for products in the general insurance market to demonstrably offer value for money, there has been little change, the FCA highlighted.
“Despite recent cost increases for consumers in motor and home insurance, our 2024 data shows the proportion of premiums paid in claims for these core products has remained broadly consistent year on year,” it said.
For cash plans, claims frequency rates, claims acceptance rates and claim complaints as a percentage of claims remaining consistently good and among the best in each category.
Health & Protection has analysed the latest data in depth to show how the key product lines compare.
Policies in force and premiums
The number of retail health cash plan policies rose from 2.28m in 2023 to 2.33m in 2024 with total premiums up from £406.7m to £426.9m.
Dental insurance policies slipped from 1.46m to 1.45m with total premiums down from £25.87m to £25.74m in 2024.
Unsurprisingly given their mandatory nature, motor insurance had by far the largest number of policies in force – 32.78m generating £20.9bn in premiums. This was followed by home buildings and contents insurance with 15.44m policies generating £6.04bn.
There were also 4.58m pet insurance covered for life policies which produced premiums worth £2.07bn.
Claims frequency
Healthcare cash plans were by far the most used insurance product in the general insurance sector.
Customers typically claimed twice a year on their policy with claims frequency standing at 207% in 2024, this was slightly higher than in 2023 when usage was 206%.
Second highest was pet insurance (covered for life) which had a claims frequency rate of 42% and then home emergency cover (stand-alone) at 34.1%.
Dental insurance’s rate remained unchanged at 6.5%. While the lowest rate was for personal accident (add-on) unchanged at 0.2%.
Premiums paid out
Healthcare cash plans once again put in a strong performance in terms of the percentage of premiums they paid out in claims. In 2024 the rate was 68.7% – just below the 71.6% achieved in 2023.
Only guaranteed asset protection (GAP) insurance paid out more in terms of premium percentage, but the FCA noted these figures reflected its interventions in the sector and do not set a precedent for this category.
Dental insurance paid out 41.5% of premiums in claims compared to 42.3% in 2023.
The worst performers for premiums paid out in claims were tyre cover (add-on) at 19.8% and personal accident (add-on) at 23.4%.
Claim complaints
Once again, healthcare cash plans had the lowest claims complaints as a percentage of claims at 0.1% – the same as for 2023.
Dental insurance also fared well with claims complaints down from 1.3% to 0.9% in 2024.
This compared to 6.9% for motor insurance, 10.8% for home insurance – buildings and contents combined and 16.1% for payment protection (credit cards, store cards and personal loans).
Claims acceptance rate
The claims acceptance rate for healthcare cash plans was 92.8%. While this put them in the top 15 products, others did better, including dental insurance which accepted 93.5% of claims.
The highest categories to accept claims were motor insurance at 98.8% and GAP insurance (add-on) at 97.7%.
The lowest figure was before the event legal expenses (home) at 50.7%.
Average claims payout
The average claims payout for healthcare cash plans was £65 – £1 lower than in 2023 and the lowest in the category.
The next lowest was for dental insurance at £122, also £1 lower than last year.
Given the nature of these policies, it was no surprise that these numbers were so low.
These figures contrast sharply with the highest average payouts which were for home buildings insurance at £7,426 and GAP insurance (add-on) at £5,744.
FCA calls for improvement
The FCA had previously expressed concerns over the value proposition of GAP insurance. This issue was tackled last year and is reflected in the data, said the FCA.
In 2023, the percentage of premiums paid out for GAP insurance (add-on) claims was just 10% and for GAP stand-alone 22.4%. In 2024 the figure for add-ons was 129% and for stand-alone 104.2%.
“The data reflects the impact of our previous intervention on GAP insurance, which some firms agreed to pause selling until they could show their products provide fair value to customers. We allowed several of these firms to start these sales again during the reporting period,” said the FCA.
“The 2024 data for GAP insurance shows claims costs as a proportion of premium of over 100%. This reflects the impact of our interventions with GAP insurance firms.
“With written premiums reducing during this period, and claims still being paid, our data on the percentage of premium paid out in claims has climbed above 100%. We expect this to stabilise in future years.
“These figures are not representative of value or product performance and should be used with caution,” it added.
Factors to consider when analysing the data
The FCA pointed out that a wide range of factors can contribute to the value of a general insurance product and these need to be considered together rather than viewing single metrics in isolation.
“Some factors not identifiable in the value measures data may also influence the results for any period,“ it continued.
“For example, business mix, age of the product, duration of policy, target market and volume of business could create significant variation across products or firms. External factors such as changes to the climate, inflation or societal issues could also have an impact.
“The proportion of premiums paid out in claims is one possible indicator of the relationship between the risk price and the total price. This figure may vary across time or between firms, for example, due to a significant change in written premiums.
“We publish this metric at an aggregate product level. This allows for some cross comparison between different products where other measures may be likely to have product specific features and variations,” said the FCA.
