At Anderson Health, one of the most common questions we receive from our clients is; how much will my policy increase by year-on-year?. While we cannot provide a definitive answer to this question, it is essential to note that several factors can impact the cost of your health insurance policy over time. Our expert health insurance brokers have compiled the main reasons why your health insurance policy increases in cost year-on-year below.
Firstly, let’s address the question will my health insurance policy increase yearly?
In the UK, it is common for private medical and critical illness insurance premiums to increase each year. It is important to note that the amount of the premium increase can vary widely between insurers and policies. Some insurers may offer policies with fixed premiums for a set period, while others may adjust premiums annually based on several factors.
What causes my health insurance policy costs to increase every year?
Individual Health Insurance Policies
Age: The older you become, the more likely you are to develop health conditions and make claims on your insurance policy. This increased risk of claims means that insurers may increase your premiums to account for the higher likelihood of paying out on your policy.
Medical Inflation: The cost of healthcare is increasing every year, which is reflected in the annual increases in the price of drugs, dressings, hospital accommodation, consultants and anaesthetist fees, nursing, and other medical services. This rate is typically around 10-11% per annum, and insurers may need to increase premiums to keep up with these rising costs.
Claims Experience: Insurance policies are designed to provide financial protection against unexpected events, but when you make even a small claim, you can lose your No Claims Discount (NCD). This means that if you make a claim, your premiums may increase the following year.
Home Postcode: Where you live can also impact your renewal rates. For example, if you live in London and have access to more expensive central London private hospitals, your rates may be higher than if you live elsewhere. This is because the cost of medical care can vary depending on location, and insurers may need to adjust their premiums accordingly.
Insurance Premium Tax: Insurance policies are subject to a government-levied tax known as Insurance Premium Tax (IPT). The rate of IPT is determined by the government and can change from year to year. The current rate is 12%, and insurers will pass this cost on to their customers by increasing their premiums.
Type of Policy: The type of policy you have can also impact the rate of increase in your premiums. Comprehensive plans may increase proportionately more than Budget plans or vice versa. This is because comprehensive plans generally offer more coverage and therefore have higher associated costs.
Overall Performance of the Insurer: Finally, the overall performance of the insurer’s business can also impact the rate of increase in premiums. If the insurer has experienced higher claims than expected, they may need to increase premiums to offset these costs and maintain profitability.
These are the main factors that can influence the rate rises of individual health insurance policies in the UK. It’s essential to remember these factors when selecting a policy and to review your coverage and premiums regularly to ensure that you’re getting the best value for your money.
Group Health Insurance Policies For Businesses
With group health insurance policies for businesses in the UK, policy cost increases can occur due to the claims experience and the number of employees covered. Here’s why:
Claims Experience: Group health insurance policies are typically offered to a group of employees of a company. The insurer calculates the premiums for the policy based on the expected claims the covered employees will make. If the group’s claims experience is higher than expected, the insurer may need to increase the premiums to cover the increased costs. This is because a high claims experience indicates a higher risk of future claims, and the insurer needs to adjust the premiums to maintain profitability.
Number of Employees Covered: The number of employees covered under the policy can also impact the cost of the policy. Insurers typically offer better rates for larger groups as the risk pool deepens. This means that the larger the group of employees covered, the less likely it is that all employees will make claims at the same time. This reduces the overall risk to the insurer and allows them to offer lower premiums to the company.
How do I manage the costs of my health insurance policy?
If you’re concerned about the cost of your health insurance policy increasing year-on-year in the UK, there are several strategies you can use to manage those costs.
Shop around for the best deal. Don’t assume your current health insurance provider offers you the best possible deal. Other health insurance companies could provide you with a better deal.
Choose a higher excess. Your excess is the amount you’ll need to pay out of pocket before your health insurance policy kicks in. Choosing a higher excess can help lower your premiums, but select an excess you can afford to pay in a medical emergency.
Stay healthy. By taking care of your health through regular exercise, a healthy diet, and avoiding high-risk activities, you can help reduce your risk of developing medical conditions that could increase your health insurance premiums.
Consider a policy with limited benefits. If you’re relatively healthy and don’t require frequent medical treatment, a policy with limited benefits may be a cost-effective option for you.
Negotiate with your health insurance provider. If you’re unhappy with your premiums, consider negotiating with your health insurance provider. They may be willing to offer you a better deal to keep your business.
“I do not have the time or expertise to find the best health insurance policy”
Anderson Health is here to help you navigate the complexities of the health insurance market and find the policy that best meets your needs and budget. If you don’t have time to shop for the right health insurance policy that suits your requirements, you can use us to arrange your health insurance coverage. Go to our website contact form to get in touch today.
Anderson Health are independent Private Medical Insurance advisors based in the city of London with customers both in the UK and throughout the rest of the world.