The high demand for private health insurance in the UK has increased the profits of Aviva, as NHS waiting lists continue to remain high. Frequent claims and rising medical expenses have led to an increase in insurance premiums.
The largest insurance company in Britain reported a 41% increase in the sale of health insurance in 2023, in comparison to the previous year. Both businesses and individual customers showed a high demand for policies, likely due to ongoing issues with the state health service.
The increase in Aviva’s health insurance sector led to a 9% growth in yearly operating profits to £1.5bn, which exceeded analysts’ predictions.
Amanda Blanc, the CEO of Aviva, stated that there has been an increase in individuals purchasing health coverage due to the current state of the NHS. Additionally, small businesses have also taken advantage of the chance to provide protection for their employees.
According to the speaker, there has been an increase in smaller companies providing health insurance to their employees, while larger companies are also expanding their coverage options with additional benefits like a digital GP service. This service allows customers to consult with an NHS-qualified primary care doctor through video and text. Aviva currently covers 1.2 million individuals with their health policies, ranking as the third largest health insurance provider in the UK behind Bupa and Axa.
Aviva’s CFO, Charlotte Jones, mentioned that there has been an increase in the number of individuals opting for company-provided health insurance. She stated that although this option has always been available, it is now being given more priority through methods like salary sacrifice, resulting in a higher demand for it.
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According to Blanc, the cost of premiums has increased partly because of a rise in medical expenses, which are growing by 8% to 10%. However, Aviva has managed to keep price hikes to a minimum through extended agreements with hospitals. Blanc stated that customers are also submitting more claims, including smaller expenses like physiotherapy, which they would typically have received from the NHS, and bigger procedures like surgery.
According to data released this week by the Private Healthcare Information Network, the number of hospital admissions covered by private medical insurance was nearly at a record high between January and September 2023. This marks a 7% increase from the previous year.
Blanc commented, “It’s not unexpected. In certain systems, there is a waiting period, but if you are unable to secure an NHS appointment within six weeks, your private health insurance takes effect.”
The number of patients waiting for non-urgent surgeries in the NHS in England reached an all-time high last year, but decreased in January. According to the Institute for Fiscal Studies, the waiting list is predicted to gradually decrease starting from mid-2024, although it will still be larger than pre-pandemic levels until 2030.
Aviva has a customer base of 16 million in the UK and 19 million worldwide. They offer various products like pensions, life insurance, car insurance, home insurance, and travel cover. According to the company’s annual report, CEO Blanc’s pay increased by 22%, reaching £6.6m in 2022 due to a larger share bonus award.
Aviva’s stock value saw an increase of over 4% during early trading on Thursday, eventually reaching 463.8p with a 2% increase. There have been talks of a potential takeover by Italian insurer Generali for Aviva.
Blanc disregarded this as just “unfounded market rumors.” There have been several British businesses that have recently garnered attention for potential acquisition, such as Direct Line, a competitor of Aviva. They rejected a £3.1 billion bid from a Belgian insurance company last week, claiming it was “extremely opportunistic.”
Blanc explained that, due to Brexit, the pandemic, the chaos surrounding the mini-budget, and other factors, it can be argued that the current valuation of most UK stocks is below their expected value.
We believe there is still room for growth in our stock price. However, our main focus is on the aspects that we can directly influence, such as the outstanding performance of our company.
Source: theguardian.com
