What factors are driving private medical insurance claims?

Claims levels are rising fast on private medical insurance (PMI). Analysis by the Association of British Insurers (ABI) in January 2026, noted a 13% jump to £4 billion in claims handled by private medical insurers across individual and workplace policies in 2024, from the £3.57 billion paid out the previous year. While this means premiums are increasing too, cover is delivering greater value. 

This rise in claims was triggered by the Covid-19 pandemic, according to Dave Middleton, executive chair of the Association of Medical Insurers and Intermediaries. “Employees are worried about the state of the NHS following the pandemic,” he explains. “They’re now much more likely to turn to their medical insurance if they need treatment.”  

Claims drivers

As well as sweeping up treatment that may previously have gone through the NHS, insurers have responded to employees’ health concerns with more digital services, such as digital GP services and online physiotherapy, that can be accessed without a GP referral. These have proved incredibly popular, with insurers seeing usage rocket since the pandemic.

There are pros and cons to this popularity says Ally Antell, distribution director at Aviva UK Health: “It’s great that employees can see a GP the same day, but it can lead to more referrals into secondary care for diagnostic tests.” 

Alongside an increase in the frequency of low-cost claims, insurers are also seeing costs rise across the board. This is down to general inflationary pressures but also the growth of high-cost cancer treatments such as CAR T-cell therapy. Andrew Elliott, senior health and protection consultant at Barnett Waddingham, explains: “Cancer claims are low incidence, but they can be very expensive. I saw a £700,000 claim for treatment for a very rare blood cancer.”  

Premium pressures

This combination of rising costs and more low-ticket claims means employers have seen premiums increase. Aon’s Global medical trend rates report 2026, published in November 2025, expects average rate increases to fall to 12% this year in the UK, down from 17% in 2025.  

And, as premiums are partly based on an onrganisation’s claims experience, some have seen much larger increases too. “Mid-sized [employers] are more exposed to claims volatility,” says Elliott. “Claims costs are usually stable for large corporates, but an expensive cancer claim could see a mid-sized [employer’s] premium increase sharply.”  

Rising costs present a dilemma for many employers. Cover may be getting more expensive, but PMI remains a highly valued benefit. For example, a 2025 survey by Epassi UK found that 25% of UK employees rated PMI as the number one must-have benefit. 

Cost controls

For employers grappling with budgets, this popularity makes PMI a very difficult benefit to take away. Aviva’s Antell says he has seen some changes being made to schemes to control costs. “Some employers are adding or increasing an excess, reducing out-patient limits or changing funding mechanisms such as using a trust or making it a voluntary benefit,” he explains. “Some have considered removing or reducing cancer cover, although very few have done this.” 

Rather than tweaking cover, employers could also take a more sustainable approach, using wellbeing and early intervention to improve health risk across the workforce. Sharon Shier, chief customer officer at WPA, explains: “Improving employees’ health through wellbeing initiatives and providing tools, such as digital GP and online physiotherapy, can help to resolve an issue quickly, preventing it becoming chronic and requiring more extensive treatment.” 

Long-term prognosis

The inclusion of more tools on PMI products that enable early intervention and support healthier workforces, could also indicate that the current surge in claims costs may be just a temporary blip. 

As employees get treated faster and their health improves, claims costs could stabilise and even fall. “The last few years have seen a double storm: claims costs have risen but there have also been additional costs for the early intervention services,” adds Shier. 

It is also important to recognise that PMI is a very different proposition to the days when it was regarded as a perk for senior management. “PMI is a highly valued benefit that can help an organisation attract and retain talent,” says Elliott. “It’s also an operational tool that supports business resilience by keeping staff healthy and productive.” 

So, while the cost of cover may have increased, employers should balance this against the fact that both usage and value are on the up too.