Booming demand in the UK for private health insurance, as NHS waiting lists remain at near-record levels, has boosted annual profits at Aviva, with more frequent claims and higher medical costs driving up premiums.
Britain’s biggest general insurer said sales of health insurance had risen 41% in 2023 compared with the previous year, with strong demand from businesses and individual customers, who were taking out policies as the crisis in the state health service continues.
The step up in Aviva’s health insurance business contributed to a 9% rise in annual operating profits to £1.5bn last year, better than analysts had forecast.
Aviva’s chief executive, Amanda Blanc, said: “We’ve seen individuals looking at the NHS and saying: ‘I can afford to buy health cover, so I will do that.’ So we’ve definitely seen a take-up in individual policies. We’ve also seen small businesses take advantage of the opportunity to protect their employees.”
More small employers are offering health cover to their staff and some big companies are expanding their cover, with add-on provisions such as a digital GP service, she said, which offers customers access to an NHS-qualified primary care doctor through video consultation and text. About 1.2 million people are covered by Aviva health policies, making it the third biggest player in the UK market after Bupa and Axa.
Charlotte Jones, Aviva’s chief financial officer, added that more people were signing up for health cover through their company than before. “Where it’s always been there, but they haven’t prioritised it – through salary sacrifice or something like that – there’s more of a push, and more people are prioritising it.”
Blanc said premiums had gone up partly due to higher medical costs, which are rising by 8% to 10%, although Aviva had been able to limit price rises through long-term contracts with hospitals. Customers were also making more frequent claims, she said – both for low-cost items such as physiotherapy, which they traditionally would have got through the NHS, and more expensive procedures such as surgery.