PRESS RELEASE BY MBD...

UK PRIVATE HEALTH MARKET RESEARCH REPORT

RELEASED: APRIL 2008

After researching the UK private health market development and taking into account various other factors the following conclusions can be drawn from MBD's report:

MARKET REVIEW 2003-2007:

Private acute healthcare expenditure is believed to have increased throughout the review period, with notable growth of 10% and 11% reported in 2004 and 2005 respectively, largely reflecting increased NHS outsourcing to the private sector. In 2007, a more moderate 5% increase is estimated to have taken spending on private healthcare to £5724 million, representing overall growth of 38% compared with the beginning of the five year period. Continued growth is partly attributable to rising demand driven by the ageing population. Nonetheless, annual levels of growth have slowed in the latter two years under review. This is partly due to increased Government spending on the NHS and a shift in Government policy.

UK PMI subscription income has been increased throughout the review period. In 2007, a 6% increase took gross premiums to a five year peak of £3241 million, consolidating the 4% growth recorded in the previous year. Overall, demand for PMI increased by a cumulative 15% between 2003 and 2007. Growth in recent years is believed to have been driven by a number of factors, including the arrival of new entrants and greater efforts to offer more affordable and attractive products, an increasing awareness in younger generations for the need for PMI, largely a result of declining confidence in the NHS fuelled by reports of virus outbreaks such as MRSA along with investigations exposing sub-standard cleaning practices in hospital wards. Furthermore, long waiting times and restricted access to certain drugs has also fuelled demand for PMI. The PMI market has largely been driven by corporate demand, as companies have identified PMI enables employees to return to work after illness or injury in a shorter space of time. Despite market growth, a stronger development in the market has been restricted due to an increased level of maturity in the market and more uncertain economic conditions during the latter part of the review period. Furthermore, there has been a trend towards budget plans and discounted premiums, which is believed to have restricted the development of the market in value terms.

MARKET FORECAST 2008-2012:

UK expenditure on private acute healthcare is projected to increase throughout the forecast period, although annual levels are expected to remain moderate reflecting increased economic uncertainties, a slowdown in demand from the NHS and a relatively mature PMI market. Nonetheless, expenditure is anticipated to increase by 3% to £6604 million (at 2007 prices) in 2012, representing overall real term growth of 15% compared with the latest year of the review period.

UK private medical insurance subscription income is projected to increase throughout the forecast period, although annual levels of growth are expected to be modest during 2008 and 2009, reflecting greater economic uncertainties. Indeed, during periods of uncertainty individuals who pay for their own PMI are likely to cut back on this luxury. Nonetheless, demand from the corporate sector is likely to be maintained. A more positive development is expected for the subsequent three years. In 2012, the value of PMI subscriptions is expected to increase by 3% to £3558 million (at 2007 prices), equivalent to overall real term growth of 10% compared with 2007.

NOTE TO EDITORS:

Market & Business Development Ltd specialises in business to business market research. The range of reports and industries in which we operate in constantly expanding (our portfolio comprises of more that 140 titles). All our reports are written by in-house market consultants.

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