The private health insurance market is growing by £385m in a year due to the NHS crisis

The UK health insurance market has grown by £385 million in a year as the NHS crisis prompted more people to seek private medical treatment and demand for dental insurance increased, according to a report.

The overall health cover market, including medical and dental insurance and cash plans, grew by 6.1% to £6.7 billion in 2022, the latest year for which figures are available, according to health data provider LaingBuisson.

About 4.2 million people were subscribed to medical coverage plans. Including those dependent on the policy, 7.3 million people were insured – the highest number since 2008.

Since the Covid-19-induced decline in the market in 2020, when it fell 2.2%, it has grown significantly faster than historical norms. Average annual growth was 6.1% between 2020 and 2022, compared to 1.7% between 2008 and 2019.

The The NHS waiting list in England continued to grow, reaching a peak of almost 7.8 meters in September last year. In February that was still 7.5 million and half of the patients had already been waiting 18 weeks or longer.

Private health insurance, the largest part of the health insurance market, grew 6% year-on-year to £5.3 billion in 2022, more than three times the average annual growth rate of 1.8% between 2008 and 2019. After a decade of decline until 2018, more people registered, especially in the wake of the Covid-19 pandemic that led to a backlog of major procedures such as hip and knee replacements.

Tim Read, author of the report, said: “Demand started to increase in 2018 when the NHS waiting list started to spiral out of control. A new Labor government will likely strive to address this problem, but will have limited fiscal space to make substantial progress.

“With people still struggling to access NHS services and the waiting list remaining stubbornly high, demand for health insurance is unlikely to fall any time soon.”

Read added: “The growth is being led by business-backed programmes, which may reflect greater awareness of the impact of employee ill health on a business – and possibly frustration at the impact an inaccessible NHS has on the productivity.”

More and more people are also paying out of pocket for medical treatment, despite the high cost of some procedures, such as knee operations which typically cost between £12,000 and £15,000.

Dental insurance and endowment plans (fixed monthly payments) have shown the highest growth in the market, up 9.7% year-on-year in 2022. However, most people who visit a dentist pay privately for treatment without any coverage.

The rise of ‘dental deserts” – parts of Britain where NHS dentists are not taking new patients – means hundreds of thousands of people with severe tooth decay have turned up in hospitals or GPs.

According to LaingBuisson, the average health insurance premium has risen to £1,225 in 2022 from £1,203 in 2021. Premiums on work policies rose to £975, while individual premiums rose to £2,252.

Insurers have reported premium increases of more than 10%, with one of them increasing as much as 40% this year and possibly beyond. This reflects an increase in claims and higher medical costs. Some people who couldn’t get a cheaper treatment option during the pandemic are now suffering from more expensive conditions to treat, Read said.

The UK health insurance market is dominated by Bupa, France’s Axa Health, Aviva and Vitality Health, which is owned by South Africa’s Discovery.

In dental insurance, the main players are Bupa, Simply Health and Unum, after Cigna left the UK market.

Read said: “I don’t think the NHS will fall apart overnight or that the private sector will prosper overnight. But I do think that people as customers, rather than people as taxpayers, are starting to reconceptualize the value of paying extra for healthcare entitlements that they should technically get from the NHS.