TL;DR
As an FCA-authorised expert broker that has helped arrange over 900,000 policies, WeCovr understands the UK private medical insurance market inside out. This guide explains why an annual review is your most powerful tool for securing the best value on your private health cover. All leading bloggers state it pays to review your PMI annually and negotiate or switch to avoid creeping premium rises.
Key takeaways
- Your Age: This is the single biggest factor. As we get older, the statistical likelihood of needing medical treatment increases. Insurers reflect this higher risk in your premium. Most providers have age-related price bands, and moving into a new one (e.g., from 49 to 50) can trigger a noticeable jump in price.
- Medical Inflation: The cost of private healthcare consistently outpaces standard inflation (the Consumer Prices Index, or CPI). In the UK, medical inflation typically runs between 8% and 12% per year. This is driven by the cost of new drugs, advanced scanning technology (MRI, CT), specialist consultant fees, and rising hospital running costs. Your insurer passes these increased costs on to you.
- Your Claims History: If you've made a claim on your policy in the previous year, your insurer now sees you as a higher risk for future claims. This will almost certainly lead to a higher renewal premium, as your no-claims discount may be reduced or removed.
- Insurance Premium Tax (IPT): This is a tax levied by the government on all general insurance policies, including PMI. The current standard rate is 12%, and this is automatically added to your premium. Any increase in IPT will directly increase your cost.
- This Year's Premium vs. Last Year's Premium: The documents should clearly show the price difference. Is it a small, expected increase, or a significant jump?
As an FCA-authorised expert broker that has helped arrange over 900,000 policies, WeCovr understands the UK private medical insurance market inside out. This guide explains why an annual review is your most powerful tool for securing the best value on your private health cover.
All leading bloggers state it pays to review your PMI annually and negotiate or switch to avoid creeping premium rises. Never auto-renew PMI—check for better deals each year. — Martin LewisNimbleFins
It's a familiar story for anyone with insurance. The first year's premium looks attractive, but the renewal quote arrives twelve months later with a significant, and often unexplained, price hike. This isn't just bad luck; it's a common industry practice.
Letting your Private Medical Insurance (PMI) auto-renew is one of the costliest financial mistakes you can make. Just like with car or home insurance, loyalty rarely pays. Insurers often reserve their most competitive rates for new customers, while gradually increasing the premiums for their existing, loyal client base.
This guide will walk you through exactly why this happens and, more importantly, what you can do about it. By taking an hour each year to review your policy, you can potentially save hundreds, or even thousands, of pounds while ensuring your cover remains perfectly suited to your needs.
Why Do PMI Premiums Rise Every Year?
Understanding the reasons behind premium increases is the first step to combating them. It's not always arbitrary; several legitimate factors contribute to the rising cost of your private health cover.
- Your Age: This is the single biggest factor. As we get older, the statistical likelihood of needing medical treatment increases. Insurers reflect this higher risk in your premium. Most providers have age-related price bands, and moving into a new one (e.g., from 49 to 50) can trigger a noticeable jump in price.
- Medical Inflation: The cost of private healthcare consistently outpaces standard inflation (the Consumer Prices Index, or CPI). In the UK, medical inflation typically runs between 8% and 12% per year. This is driven by the cost of new drugs, advanced scanning technology (MRI, CT), specialist consultant fees, and rising hospital running costs. Your insurer passes these increased costs on to you.
- Your Claims History: If you've made a claim on your policy in the previous year, your insurer now sees you as a higher risk for future claims. This will almost certainly lead to a higher renewal premium, as your no-claims discount may be reduced or removed.
- Insurance Premium Tax (IPT): This is a tax levied by the government on all general insurance policies, including PMI. The current standard rate is 12%, and this is automatically added to your premium. Any increase in IPT will directly increase your cost.
The "Loyalty Penalty" Explained
Beyond these standard factors is the "loyalty penalty." Insurers know that many customers find the renewal process a hassle and will simply let their policy roll over. They capitalise on this inertia by applying what's known as 'price walking' – the practice of increasing prices for existing customers each year at a rate higher than can be justified by risk alone.
While the Financial Conduct Authority (FCA) introduced new rules in 2022 to ensure renewal quotes are not more expensive than the equivalent price for a new customer, the complexity of PMI policies can still leave room for subtle price hikes. The best defence remains being a proactive, informed consumer.
| Factor | Description | Typical Impact on Premium |
|---|---|---|
| Ageing | Moving into a new age bracket. | 5% - 15% increase |
| Medical Inflation | Rising costs of treatments, drugs, and technology. | 8% - 12% increase |
| Claims | Making a claim in the previous policy year. | 10% - 50% increase (or loss of NCD) |
| "Loyalty Penalty" | Insurer pricing strategy for existing vs. new clients. | 5% - 10% increase |
A Step-by-Step Guide to Your Annual PMI Review
Set aside an hour about four to five weeks before your renewal date. This gives you plenty of time to explore your options without feeling rushed.
Step 1: Analyse Your Renewal Offer
Your insurer must send you a renewal pack well before your policy expires. Don't just glance at the final figure. Look for:
- This Year's Premium vs. Last Year's Premium: The documents should clearly show the price difference. Is it a small, expected increase, or a significant jump?
- A Breakdown of the Cost: If you have a family policy, check the cost per person.
- Changes to Your Policy: Has the insurer changed any terms, conditions, or hospital lists? They must declare this.
Step 2: Re-evaluate Your Health and Lifestyle Needs
Your circumstances can change significantly in a year. The policy that was perfect last year might not be the best fit today. Ask yourself:
- Family: Have you had children, or have adult children now left home and need their own cover?
- Finances: Is your budget tighter or more flexible than last year?
- Location: Have you moved house? Your postcode can affect your premium, and your local hospital list might need updating.
- Employment: Have you started a new job that offers a company health insurance scheme?
- Health: Has your general health been good? Are you less concerned about needing comprehensive outpatient cover, for example?
Step 3: Benchmark the Market with an Expert Broker
This is the most crucial step. You cannot know if your renewal offer is competitive without comparing it to the rest of the market. This is where a specialist PMI broker like WeCovr becomes invaluable.
An independent broker:
- Does the Hard Work for You: They use sophisticated software to compare policies from all the leading UK insurers in minutes.
- Offers Expert Advice: They can explain the pros and cons of each policy, decipher the jargon, and help you understand the crucial differences in cover.
- Provides Access to More Options: Some deals are only available through brokers.
- Costs You Nothing: Brokers are paid a commission by the insurer you choose, so their expert advice and service are free for you.
Step 4: Negotiate With Your Current Insurer
Armed with a competitive quote from another provider, you are now in a strong negotiating position.
- Call your current insurer's retention or renewals department (not the general customer service line).
- State that you are disappointed with your renewal premium.
- Inform them that you have received a more competitive quote for a like-for-like policy from another provider.
- Ask them directly: "Can you match this price or improve on my renewal offer?"
Often, they will be able to offer an immediate discount to keep your business. They may not match the best new-customer deal, but any reduction is a win.
Step 5: Be Prepared to Switch
If your current provider won't budge or their best offer is still uncompetitive, it's time to switch. This process can be daunting, which is why using a broker is so helpful. They will manage the application and ensure there are no gaps in your cover.
However, before you switch, you MUST understand how pre-existing conditions are handled.
Critical Warning: Switching PMI with Pre-existing Conditions
This is the single most important consideration when changing your private medical insurance in the UK. Standard policies are designed to cover acute conditions (illnesses that are short-term and curable, like a joint injury or appendicitis) that arise after you take out the policy.
They do not cover chronic conditions (long-term, incurable illnesses like diabetes, asthma, or high blood pressure) or pre-existing conditions you had before the policy began.
When you switch insurers, any medical condition you have suffered from in the past few years will be classed as pre-existing. How the new insurer treats these conditions depends on the type of underwriting you choose.
Underwriting Options When Switching
| Underwriting Type | How It Works | Pros | Cons |
|---|---|---|---|
| Moratorium (Most Common) | You don't declare your full medical history upfront. The insurer automatically excludes any condition you've had symptoms of, or treatment for, in the 5 years before the policy start date. | Quick and easy application process. | Lack of certainty. A condition might be excluded when you claim if the insurer finds evidence it was pre-existing. |
| Continued Moratorium | If you switch on these terms, the new insurer effectively takes over your "moratorium clock" from your old insurer. If you have satisfied the 2-year claim/symptom-free period for a condition with your old insurer, the new insurer will honour this and cover it. | Excellent for healthy individuals wanting to switch. Can provide continuity of cover for past conditions. | Only available when switching from another moratorium policy. Not all insurers offer it. |
| Full Medical Underwriting (FMU) | You complete a detailed health questionnaire, declaring your full medical history. The insurer then tells you upfront exactly what is and isn't covered. | Complete clarity from day one. You know precisely where you stand. | The application process is longer. Conditions are often permanently excluded from cover. |
| Continued Personal Medical Exclusions (CPME) | If you switch from an FMU policy, the new insurer agrees to carry over the exact same exclusions you had on your old policy. | Ensures continuity of cover. You don't risk new exclusions being added for minor issues. | You must be switching from a policy that used Full Medical Underwriting. |
Crucial Takeaway: If you have developed a medical condition while with your current insurer, switching can be risky. The new provider will likely exclude that condition. In this scenario, negotiating a better price with your existing insurer is often the safest option. A broker like WeCovr can provide expert guidance on the best strategy for your personal situation.
7 Smart Strategies to Lower Your PMI Premium
Whether you're negotiating with your current provider or switching to a new one, you have several levers you can pull to make your cover more affordable.
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Increase Your Excess: The excess is the amount you agree to pay towards the cost of any claim. For example, if you have a £250 excess and your treatment costs £3,000, you pay the first £250 and the insurer pays the remaining £2,750. Increasing your excess from £100 to £500 can reduce your premium by 15-25%.
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Choose a "Guided" or "Limited" Hospital List: Insurers group hospitals into bands, with prime central London hospitals being the most expensive. Opting for a policy that excludes these high-cost hospitals or uses a "guided" list (where the insurer directs you to a specific consultant or hospital for efficiency) can lead to significant savings.
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Add a 6-Week Option: This is a brilliant way to slash costs. A 6-week option means that if the treatment you need is available on the NHS within six weeks of when it's recommended, you will use the NHS. If the NHS waiting list is longer than six weeks, your private cover kicks in immediately. Given that many key NHS waiting times are far longer than this, it's a popular and effective cost-saving measure. According to NHS England data from mid-2024, the median wait for consultant-led elective care was over 10 weeks, making the 6-week option a very valuable feature.
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Tailor Your Outpatient Cover: Full outpatient cover (covering all consultations and diagnostics before a hospital admission) is expensive. You can choose to limit it (e.g., to £500 or £1,000 per year) or remove it completely, which will dramatically reduce your premium. This makes PMI function more as a "hospital plan" for major procedures.
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Review Therapy and Mental Health Cover: Check if your policy includes cover for therapies like physiotherapy or osteopathy, and consider if you need it. Likewise, mental health cover can be a valuable but costly add-on. Tailoring these benefits to what you genuinely need can save money.
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Pay Annually: Most insurers offer a discount of around 5% if you can pay your full annual premium upfront rather than in monthly instalments.
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Embrace a Healthy Lifestyle: Many leading PMI providers now offer rewards and discounts for healthy living. This can include discounted gym memberships, free coffee, or even reductions on your renewal premium for tracking your activity levels.
Take Control with an Expert by Your Side
The world of private health cover can seem complex, but the principle of the annual review is simple: never pay more than you have to. By being a proactive consumer, you can fight back against rising premiums and ensure you always have the right cover at the best possible price.
Using an independent broker like WeCovr removes the hassle and guesswork. Our team of experts provides a free, no-obligation service to compare the market for you, explain your options in plain English, and help you negotiate, switch, or tailor your policy for maximum value. We have high customer satisfaction ratings because we prioritise finding the right solution for you.
Furthermore, WeCovr customers gain complimentary access to our AI-powered nutrition app, CalorieHero, to help support their health goals. We also offer discounts on other policies, such as life or home insurance, when you purchase a PMI plan through us.
The UK's healthcare landscape continues to face challenges, with NHS waiting lists remaining a significant concern for millions. Taking control of your health options with a well-priced PMI policy provides peace of mind and fast access to treatment when you need it most. Don't let loyalty to one provider cost you a fortune—make the annual review your new habit.
Is it always cheaper to switch my private medical insurance?
How does a '6-week option' reduce my PMI premium?
Do I have to declare a minor illness when switching my PMI provider?
Will my private medical insurance cover chronic conditions like asthma or diabetes?
Ready to see how much you could save? Get your free, no-obligation quote from WeCovr today and let our experts find the best private medical insurance UK deal for you.
Sources
- NHS England: Waiting times and referral-to-treatment statistics.
- Office for National Statistics (ONS): Health, mortality, and workforce data.
- NICE: Clinical guidance and technology appraisals.
- Care Quality Commission (CQC): Provider quality and inspection reports.
- UK Health Security Agency (UKHSA): Public health surveillance reports.
- Association of British Insurers (ABI): Health and protection market publications.
