Financial advisers across the UK are warning of a growing trend of private health insurance (PMI) cancellations as businesses and households tighten their belts amid rising taxes, inflation and economic uncertainty.
During the Covid pandemic, PMI usage has more than doubled. According to comparison site ActiveQuote.com, sales rose 100% between November 2020 and January 2021 compared to March to May 2020, as fears over NHS waiting times led to record numbers turning to private insurance.
But now advisers say economic pressures and higher tax burdens are forcing many to rethink their policies or abandon them altogether.
David Stirling, independent financial adviser at Mint Wealth Ltd in Belfast, said the wave of cancellations was one of the clearest signs of stress among SMEs and middle-income households.
“There has been a significant increase in PMI insurance cancellations this year following the fiscal onslaught on the business community,” he said.
“Tax increases, rising costs, stubborn inflation and economic uncertainty are forcing businesses to save money and reevaluate their spending. PMI, while valuable, is now back on the ‘nice-to-have’ list rather than the ‘must-have’ list.”
He called on policyholders to consider cost-saving options instead of canceling straight away – for example by adding a deductible or limiting insurance cover.
“PMI has evolved from essential to luxury”
Dariusz Karpowicz, director at Albion Financial Advice in Doncaster, said the economic squeeze had made PMI an early victim in companies’ cost reviews.
“Cancellations are definitely on the rise and frankly, who can blame people when they’re under pressure from all sides? With interest rate rises in Northern Ireland and stubborn inflation, the PMI has often lost out.
“The irony is painful – NHS waiting lists are reaching record highs while companies are being forced to give up private cover.”
He added that many companies that adopted PMI during the pandemic now view it as an unaffordable luxury.
Eamonn Prendergast, Chartered Financial Adviser at Palantir Financial Planning in Bromley, highlighted another challenge – age-related premium increases.
“PMI becomes more expensive as you age because the likelihood of claims increases. For many, the increasing costs are simply unsustainable,” he said.
“Some wealthier clients choose to self-fund private treatments instead. This gives them control, but for others the numbers just don’t add up.”
While many are making cuts, advisers warn against hasty cancellations and emphasize that PMI can still be life-saving in some cases.
Scott Gallacher, director at Rowley Turton in Leicester, said: “I understand why some companies are reviewing costs, but PMI can make a crucial difference. Personally, I have benefited from treatment that is only available privately – it has saved my hearing.”
“Customers have shared similar stories, such as receiving specialized cancer treatment that added years to their lives. If cost is an issue, speak to a broker before canceling completely.”
Justin Moy, managing director of EHF Mortgages in Chelmsford, said the popularity of PMI had fallen significantly as NI contributions and the cost of living increased.
“Private health insurance has gone from a near-necessity to a luxury. Businesses face higher labor costs and consumers juggle higher mortgage rates and inflation. Something has to give, and unfortunately PMI is often top of mind.”
Experts fear the trend could accelerate by 2026 as further fiscal tightening is expected in the autumn budget. For many households and small businesses, consultants say the Purchasing Managers’ Index now symbolizes broader pressures on the cost of living – a product once considered vital but now out of reach.
