LONDON, Nov 30 (Reuters) – Health insurance prices in Britain are likely to jump by at least 20 percent next year due to the rising number and cost of claims, industry advisers say.
British employers have expanded their use of company health schemes as the country’s National Health Service struggles to meet patient demand following the COVID-19 pandemic.
A record 4.4 million people now have health insurance through their employer, according to the Association of British Insurers, as hospital waiting lists in England hit record levels in September. The target of treatment within 18 weeks has not been met since 2016.
“While in the past PMI (private medical insurance) was seen as a fallback, it is now becoming a primary access point to the healthcare system,” said Luke James, senior consultant at Mercer Marsh Benefits.
Major U.K. health insurer AXA ( AXAF.PA ) said earlier this month it expected a “headwind” from higher health claims in Britain. AXA declined further comment.
Aviva ( AV.L ) declined to comment and Bupa did not respond to a request for comment.
Britain’s individual and workplace health insurers have paid out a record nearly three billion pounds ($3.74 billion) in claims in 2022, an ABI spokesman said.
Employers are eager to offer health insurance because delayed treatment can lead to illness and lost productivity, industry advisers say.
Premiums – which usually take inflation into account – for individual and workplace policies increased by less than 2% between 2019 and 2022, an ABI spokesman said.
But with costs for medical staff and services rising faster than general inflation, greater use of online doctors and more expensive care, including new cancer treatments, premiums are rising, advisers say.
Some workplace health insurance schemes are seeing rate hikes of more than 40%, James said.
“The market is nervous, we’re in a very unknown phase and insurers don’t like unknowns,” said Rachel Western, director of consultancy Aon.
“Risk is hard to predict.”
Tim Cowan, senior partner at insurance broker Anderson Health, is among those who see increased post-pandemic demand for private mental health services, including expensive psychiatric hospital care.
In addition, the continued popularity of telecommuting could lead to more claims for back problems, said Juan Serey, a private medical insurance adviser at broker Secure Mortgages and Protection.
For 2024, Mercer Marsh Benefits forecasts a UK medical trend rate of 11%, against 3% for general inflation. This rate reflects medical inflation along with changes in treatment, use, and regulation.
But insurers are experiencing even higher inflation, some consultants say.
Employers are beginning to question how they can cope with rising insurance costs, said Brett Hill, head of health and protection at consultants Broadstone.
This could lead to workers paying a flat fee such as £100 or £250 for initial consultations with a private online doctor or companies offering health checks to identify medical problems before they get worse, he added.
($1 = 0.8025 pounds)
Reporting by Carolyn Kohn, editing by Sinead Kruse, Alexandra Hudson
Our standards: The Thomson Reuters Trust Principles.