Sustainable and fair pricing

Like other insurance products, private healthcare insurance premiums cover the cost of paying insured claims and the operations which support them. When setting premiums, we have to consider underlying cost inflation (inflation), incidence trends (claims made during the year) and increases in hospital treatment and specialist costs and innovation in medical practice (medical inflation) to determine our pricing approach. Relevant risk factors are then applied, to arrive at the end price.   

A thriving private healthcare sector is important to provide customer choice and meet growing patient demand. We’re here to help our members access the care, diagnostics, and specialist treatment they need.

Our insight shows that the incidence trends and medical inflation have risen but are now stabilised at the increased level of demand. We have seen claim costs increase between 20%-25% higher for 2023 than 2022.

At PHC we do try to control our price increases whilst continuing to provide value to our members. Unfortunately this year we are seeing higher than usual price increases. We appreciate that in the current economic landscape and cost of living crisis, this increase is difficult to understand so we would like to provide you with the rationale for this.

Claims cost
The amount a group claims during the policy year, like other insurance products, will have an impact on the cost of the insurance provided. We recognise that from time to time, treatment is needed for more serious illnesses resulting in a high value claim. We take steps in our pricing methods to mitigate the impact of these more unusual costs on renewal pricing. However, due to the pressures on the NHS, we are seeing more people using their policy to get treatment (increased incidence), which is resulting in increasing spend which means that increases at renewal may be higher.

Higher than expected inflation
The use of private medical insurance has risen sharply over the past few years, seeing more people than ever claiming for treatment, as have private hospital treatment costs. This is as a result in no small part to the challenges that the NHS are under with demand for healthcare in the UK overtaking capacity. The continued pressure on attracting and maintaining healthcare staff means that wage bills are increasing too and we anticipate that medical wage inflation will continue to rise which will in turn impact the cost of treatment, and therefore the price you pay.

Medical inflation
The term ‘medical inflation’ refers to medical trends and developments, and the increase in cost to support them. This often includes the cost of advances in treatments and procedures, and the increased availability and usage of them around the world. New drugs, new treatments and technology mean that serious illness, such as heart disease and cancer, can be treated more effectively than ever before. This does have an impact on the rate of medical inflation as we apply these advances to your cover, which in turn is reflected in the cost of your plan.

Other contributing factors
Age and medical history are some of the factors that can increase our likelihood of getting ill or injuring ourselves. These factors do need to be taken in to consideration when pricing your policy, as we live longer and need more treatment. By having private medical insurance, it does reduce the impact on you of having to pay for unexpected treatment yourself, which can be expensive:

Colonoscopy - £2,200

Cataract Surgery - £2,700

Tonsillectomy - £3,000

Knee arthroscopy - £4,300

Hip replacement - £13,400

The use of private medical insurance is changing too. We want to provide you with cover that meets your needs such as primary care services with private GPs through to treatment for musculoskeletal issues and mental health support. The private medical insurance provided is constantly progressing as we cover more treatments relevant to today’s society. The increasing range of health and wellbeing services and how you can access them also has an impact on the cost of your cover. At PHC we pride ourselves on providing you with the best personal and responsive customer service and ensuring that you receive the support, and eligible treatment, you need when you need it. Unfortunately, all these factors do impact the cost of cover provided to you.

Premiums will continue to take into account risk factors that are relevant to each customer, alongside the information we know about wider trends. As a responsible insurance provider our pricing approach has always been, and will continue to be, to apply the right premiums for the right risks.    

Private healthcare insurance pricing needs to be fair and sustainable and we believe this change, driven by health system-wide trends, is essential to ensure we can continue to offer quality care for our clients and members, both now and in the longer-term.  

Here's where the money we receive goes:

PHC products are underwritten by AXA Health and as the insurer they receive the premium that is paid to us. As well as ensuring there is enough premium to cover claims costs, from your subscription we need to pay HMRC IPT which is currently 12%, commission to the broker who looks after ensuring your demands and needs are met, and our administration costs.