COVID-19 will reduce the number of private health insurance policies in the UK
As more individuals become infected with COVID-19, virtually all of the private sector hospital capacity has been reallocated to the National Health Service (NHS) to help it cope with the increasing strain and demand. Such a move will lead to some current private medical insurance (PMI) policyholders cancelling their coverage because they view it as obsolete.
Concern about the service provided by the NHS or waiting times for procedures was the main reason why consumers bought PMI in 2019, according to GlobalData’s 2019 UK Insurance Consumer Survey. 28.8% of respondents cited this reason in 2019, which was a substantial increase on the 13.8% of respondents in 2018.
While these are unprecedented times, PMI policyholders would have previously had peace of mind that if they contracted the virus, they could’ve bypassed the NHS and gone straight into private care. However, following the reallocation of resources, customers will no longer be able to access private hospitals as before, meaning that customers would default to using NHS services. Policyholders will therefore consider cancelling their cover, especially as they seek to ease their financial burden during a time of worsening economic outlook and reduced job security.
Insurers should be proactive about getting in touch with PMI policyholders to improve retention. These policies can still provide meaningful value to the customer as they often offer additional resources, like access to digital GP services and mental health counselling, the latter of which should see an increase in demand given the restraints on daily life. Some insurers, like Vitality and Bupa, are offering a cash benefit to policyholders for days spent in a hospital due to coronavirus.
Insurers should also highlight that if policyholders cancel their cover now and wish to purchase a new policy in the future, customers will have to go through the underwriting process again, meaning that they could face increased premiums if their health has deteriorated since their first PMI purchase.