Annual health insurance set for significant growth in coming months

Annual health insurance is set for significant growth this year driven by concerns about NHS waiting lists and continuing doctor strikes.

New research by Consumer Intelligence for Smart Money People, the financial services customer insight platform, found an expected 21% increase in potential growth in private medical cover up from 14% reported in H2 2023.

The data is taken from its Insurance Uptake Score, a bi-annual barometer of personal lines insurance purchasing decisions in the UK, based on consumer-reported likelihood to continue, purchase, increase, reduce, or cancel their cover.

While appetite for health cover soars, annual home insurance, specifically buildings cover, will see the biggest potential growth (+31%) of the most common annually purchased products, followed closely by motorbike insurance.

From highest to lowest, the Insurance Uptake Scores for the top ten personal lines insurances are:

●      Home insurance – buildings: +31%

●      Motorbike insurance: +26%

●      Health insurance: +21%

●      Home insurance – contents: +17%

●      Travel insurance (annual): +16%

●      Gadget insurance: +15%

●      Life insurance: +14%

●      Pet insurance: +7%

●      Homes insurance – buildings and contents: +6%

●      Motor insurance: +3%

Home insurance

The sector-leading growth in buildings insurance is driven by new policies with a 25% increase in new purchases and 11% rise in existing holders increasing their cover (just 7% plan to reduce or cancel their policies). The primary reasons given for this are “peace of mind” (46%) and an expected change in circumstances requiring additional cover (40%). Also, three in ten (30%) have discovered they aren’t covered for what they thought they were.

One in five (19%) intend to increase their home contents insurance coverage in the next 12 months (14% new purchases, 5% by increasing their cover) whereas 3% intend to reduce or cancel their policies (2% by reducing cover, 1% by cancelling).

Health insurance

The growth in annual health insurance is primarily driven by an 11% increase in new purchases and a 13% growth in existing holders increasing their cover – either the limits they are covered for or adding optional cover/add-ons.

It can also be attributed to rising numbers of 25 to 34 year olds (23%^[1]) planning to take out health insurance in the next 12 months – the upshot, in part, of more employers offering health insurance as an employment benefit to their employees.

Motorbike, motor and gadget coverage levels

Motorbike insurance has soared up the table of personal lines products set for growth. The Smart Money People data shows an expected 32% increase in people either purchasing or increasing motorbike cover in the next 12 months, compared to 6% decreasing or cancelling. This means the Uptake Score has jumped from just 3% reported in H2 2023 to 26% currently, reflecting the seasonal nature of motorbike sales. As we approach the spring and summer months, it is likely that respondents are considering motorbiking again and seeking coverage.

Conversely, motor insurance will see the lowest growth in the next 12 months – just 3%. One in ten motorists said they will make changes to their policy, relatively consistent with levels reported in 2023 (11%).

Gadget insurance is expected to see a 15% uptick in the next 12 months, with 1 in 2 (53%) 18-24 year olds intending to take out cover. This compares to the 6% expected growth reported in 2023.

Propensity to switch – customer retention to remain high

According to the data, insurers will benefit from high levels of customer loyalty and retention this year. Three-quarters (74%) of policyholders intend to stay with the same provider at renewal, with one in four (26%) switching. This is consistent with the previous wave of Insurance Uptake Score data, a likely result of FCA pricing rules introduced in 2022 to equalise prices quoted for new and existing customers and making renewal premiums more attractive.

Smart Money People CEO, Jacqueline Dewey said: “Our findings suggest an optimistic outlook for the sector in 2024. Consumers are intending to increase their personal lines insurance appreciating the importance of having adequate cover, and many plan to stick with their current provider.

‘It’s interesting to see that annual health insurance is expected to see particular growth. With pressure on the NHS leading to longer waiting lists and delayed or cancelled procedures,

this growth is reflective of a generation of people who are deciding to take proactive decisions when it comes to their health.”

Insurance Uptake Score Wave 1 (August 2023)

●      Travel insurance (annual): +15%

●      Health insurance: +14%

●      Home insurance – buildings: +13

●      Life insurance: +10%

●      Motorbike insurance: +10%

●      Gadget insurance: +6%

●      Pet insurance: +6%

●      Home insurance – contents: +4%

●      Homes insurance – buildings and contents: +4%

●      Motor insurance: +3%