Health insurance premiums way above inflation

The average private medical insurance (PMI) premium has increased by a huge 37 per cent since 1999, according to research from PruHealth.

This figure is more than three times the amount of the Retail Price Index inflation, 12 per cent, over the same period.

In its Health Insurance Premium Report PruHealth, part of the insurer Prudential, states its concern that the number of health insurance policyholders will significantly fall unless something is done to reduce premiums.

The report mentions an initiative by PruHealth to lower premium costs, where people who make a big effort to exercise more and live a healthier lifestyle will get reductions in their insurance premiums without lessening the standard of cover.

Shaun Matisonn, chief executive of PruHealth, said: "The answer appears to be simple. People who make more effort to look after their health make fewer claims. So, why not give policyholders incentives to manage their health more effectively and then reward them with lower premiums when they do?

"This approach reduces both the insurer's risk and the cost of cover at the same time, without affecting the quality."

The report also shows that this scheme has helped to bring younger people to the market, as 71 per cent of individual policyholders are under 45 compared to 45 per cent across the industry.