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Monday 4 December 2017

Seven in 10 private medical insurance policy holders have no idea how premiums are calculated under the no claims discount structure

VitalityHealth’s ‘ABC’ pricing framework increases transparency at policy renewal
VitalityHealth aims to end customer confusion around renewals

New research from VitalityHealth reveals that 70% of private medical insurance (PMI) policy holders have no idea how their premiums are calculated under the no claims discount structure (NCD).

The study also found that only around one in ten (13%) policy holders found it easy to explain how their insurance premium is worked out. This is compared to more than a third (36%) of those surveyed saying they found it easy to explain football’s offside rule and more than a quarter (28%) who found it easy to explain the human digestive system.

VitalityHealth has recognised the difficulties people have in understanding the pricing of premiums under the industry-standard NCD structure and has changed its approach to ensure renewal premium changes are fair, intuitive and transparent for members. The new renewal pricing mechanism calculates renewal premiums based on an ‘ABC’ model which takes into account increasing Age; the Base medical inflation rate; and a new Claims and wellness engagement measure. 

Premium changes will be fully transparent, with VitalityHealth members shown how their renewal premium is calculated on an easy to understand table. Additionally, in an industry first, the combined claims and engagement measure means any increase associated with members claiming can be reduced by efforts to manage and improve their health.

Neville Koopowitz, CEO of VitalityHealth, said: “With seven in 10 PMI policy holders having no idea how premiums are calculated under the no claims discount structure, it’s no wonder many people find the renewal process complex and opaque. We believe that no member should ever be surprised when they get their VitalityHealth renewal, which is why we have introduced the ABC model, a groundbreaking approach that sees the effects of age, medical inflation and wellness engagement combined to deliver a fairer, more intuitive and transparent pricing structure.

Furthermore, not only do our members now know how to calculate the changes to their premium at each annual renewal date but, by engaging with their health and increasing their Vitality status, they can more actively control their premium through an alternative method than simply not claiming.”

Independent financial adviser Roy McLoughlin, Associate Director at Cavendish Ware, said:
“It’s true that many consumers can be confused about how PMI premiums are calculated, so we welcome any move from insurers that aim to make the process simpler and clearer. The increasing cost of medical treatment is a challenge across the industry and Vitality’s ABC model should ensure clients and advisers are better informed about any premium increases and why they have occurred.”


1. Opinium, on behalf of VitalityHealth, surveyed 1,009 private health insurance policy holders from 18th to 25th October 2017. This report is based on the results of an online survey. The results have been weighted to nationally representative criteria.