Increasing premiums, declined claims and long waits are slowing PMI market growth with lapses rising, but mortgage brokers and young people provide positivity, hears Abigail Montrose
The individual private medical insurance (PMI) market continues to expand its membership although the rate of growth is much slower than it has been since Covid.
Increased premiums are generally cited as the main reason but other factors are causing people to rethink their cover, according to industry leaders attending Health & Protection’s House of Lords roundtable.
In 2024 the rate of growth was around 6.5%, compared with double-figure increases of 11.5%, 13% and 12.1% respectively over the previous three years.
A sharp rise in claims and medical inflation have resulted in providers increasing premiums and this has had a knock-on effect on customer demand.
While membership is still growing, many people are finding they cannot afford the higher premiums and the increased demand is starting to also hit waiting lists for private treatment.
Squeezed budgets
“I suspect the slowdown in net growth is partly due to lapses where people of a certain age have decided it’s just not affordable,” said Marcia Reid, non-executive director at Sherwood Healthcare.
“There are also those who are making buying decisions and are finding their budgets are already squeezed so they have less disposable income.
“There is a lack of confidence in the economy in general. So people might be quite nervous about making that investment.”
People are also being put off buying cover because they are not always convinced it’s worth it, said Chris Hughes, founder of Healthwell.
“We’re hearing it’s basically down to value for money. People just don’t believe the product is worth the money.
“At the moment the waiting times on private facilities are long, if not longer than the NHS. So people are asking ‘what’s the point?’”
While PMI products may be beyond the reach of some and not an attractive proposition to others, that does not mean these people are foregoing paying for private treatment if they need it, said David Middleton, executive chairman of the Association of Medical Insurers and Intermediaries (AMII).
“There are a lot of people who are self-insuring. I have friends who are saying ‘PMI is too expensive. I’m going to put some money aside and self-insure’.
“This is particularly the case when it comes to diagnostics,” he added.
Geographical commonalities
While NHS healthcare is often a postcode lottery, where provision is good, some people are choosing to let their PMI policies lapse, the panel heard.
“We’re definitely seeing a correlation between geography and lapses,” noted Kristian Breeze, healthcare director at Ascend Broking Group.
“In certain areas, typically more affluent areas, people may have better access to the NHS.
“Interestingly, these affluent areas were typically the ones that had lots of people with PMI. Well, some of the older people in these areas are now lapsing,” he observed.
There are also newcomers entering the PMI market who come from these more affluent areas though, says Breeze.
“We’re seeing younger people, scaffolders and bricklayers who have done well for themselves, taking out PMI. It feels like the market is shifting,” he added.
But this is not everyone’s experience with younger people.
“I’m seeing fewer younger age profiles,” said Penny Jackson, owner of The Insurance Boutique.
“Post-Covid I was getting a lot of younger clients coming through where their employers weren’t offering the benefits. They’re not that interested in PMI now because the noise has died down a bit post-Covid in this area,” she said.
Rejected claims
People who have had a claim turned down are also more likely to lapse, added Jackson.
“There’s a big issue with people understanding what they’ve bought, especially around moratorium products.
“If people put in a claim and its then rejected, they cancel their policy; that’s where people are losing faith in understanding what they’ve bought and how it works,” she said.
In the Health & Protection Individual PMI Report 2025, three of the four providers who reported their claims decline rates, said these had risen in the last year. Pre-existing conditions and moratoriums were key reasons for claims being turned down.
While the rate of expansion in the individual PMI market may be slowing, it is still growing.
One potential area of growth is among people who lose their PMI cover when they change employment, pointed out Paul Nugent, chief executive at Santé Group.
“Where the market is growing is among people who’ve had PMI as an employee, and they leave their employment to go and do their own thing,” he said.
“That’s where they value it, because they know their employer paid for it and they wouldn’t be without it. That’s a big part of the 6.5% growth we’ve seen in the market,” he said.
Is sustainable growth possible?
Attracting younger people into the PMI market is essential if growth is to be sustainable, pointed out Reid.
“What makes the market sustainable is getting more younger, fitter people joining,” she said.
“Just having more members doesn’t make the market more sustainable because then you’ll just have people who are claiming at the high rate.
“We want people to get on their member journey young and then we’re getting them on the preventative healthcare and the mental health support journey.
“Young people get used to paying for PMI by allowing for it in their expenditure and then the risk of the whole book goes down and everybody benefits,” she said.
Interest in PMI is also coming from mortgage advisers, pointed out Amy Wilson, head of insurance at The Right Mortgage & Protection Network.
“Just thinking about this from a different perspective, we’re seeing interest in PMI being generated from mortgage advisers. We’ve had more enquiries this year than we’ve ever had,” she said.
Although buying a home is stressful, with the right training, mortgage advisers are in a position to identify a client who might benefit from PMI, said Wilson.
The panel agreed that educating people on the benefits of PMI is a key way to support the market.
Helping people understand where PMI fits in with NHS provision can help people choose the right provision and keep costs down, said Jackson.
“You don’t have to end your relationship with the NHS when you take out PMI,” she continued.
“I say to my clients, especially the older ones, that insurance works alongside NHS provision very nicely. So if you want PMI for bigger health needs, take a bigger excess.
“If you’re likely to have back pain or need a hip replacement, consider diagnostics cover. Maybe use the NHS for cancer treatment or if you have a heart attack, but use your PMI cover tactically.
“When you’re thinking of making a PMI claim, be a bit strategic. Think about what you might claim for or if you can get this on the NHS instead,” she added.
Preventative services encourage renewals
Many PMI contracts offer attractive services which customers may not be taking full advantage of and which can add real value to a policy, the panel highlighted.
Preventative services to help with mental health, free health checks and wellbeing can also all help add value.
These benefits are similar to the cash plan model where the provider wants you to use the services, pointed out Reid.
“With the cash plan model, they want you to claim so you’re more likely to renew,” she said.
“We should encourage younger people to join and encourage them to use these preventative services so we can say, this is what you’re going to get for your money. If they use the GP line, or the mental health helpline or use the healthcare app, they’re more likely to stay,” Reid concluded.
