Financial advisers across the UK are warning of a growing trend in private medical insurance (PMI) cancellations as businesses and households tighten their belts in the face of rising taxes, inflation and economic uncertainty.
During the Covid pandemic, PMI uptake more than doubled. According to comparison site ActiveQuote.com, sales between November 2020 and January 2021 surged by 100% compared with March to May 2020, as fears over NHS waiting times drove record numbers towards private cover.
Now, however, advisers say that economic pressures and higher tax burdens are forcing many to rethink or abandon their policies entirely.
David Stirling, Independent Financial Adviser at Mint Wealth Ltd in Belfast, said the wave of cancellations is one of the clearest signs of stress among SMEs and middle-income households.
“There has been a notable uptick in PMI policy cancellations this year following the fiscal assault on the business community,” he said.
“Tax hikes, spiralling costs, stubborn inflation and economic uncertainty are forcing companies to penny-pinch and re-evaluate their outgoings. PMI, while valuable, is now back on the nice-to-have list rather than a must-have.”
He urged policyholders to explore cost-saving options rather than cancelling outright — such as adding an excess or limiting cover.
“PMI has gone from essential to luxury”
Dariusz Karpowicz, Director at Albion Financial Advice in Doncaster, said the economic squeeze has made PMI an early casualty in company cost reviews.
“Cancellations are definitely picking up steam, and frankly, who can blame people when they’re being hammered from all sides? With NI hikes and stubborn inflation, PMI often gets the chop first.
“The irony is painful — NHS waiting lists are at record highs just as businesses are forced to drop private cover.”
He added that many companies which introduced PMI during the pandemic now view it as an unaffordable luxury.
Eamonn Prendergast, Chartered Financial Adviser at Palantir Financial Planning in Bromley, pointed to another challenge — age-related premium increases.
“PMI gets more expensive as we age, because the likelihood of claiming rises. For many, the escalating cost simply isn’t sustainable,” he said.
“Some wealthier clients are choosing to self-fund private treatment instead. It gives them control, but for others, the numbers just no longer stack up.”
While many are cutting back, advisers are warning against rash cancellations, stressing 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 critical difference. I personally benefited from treatment only available privately — it saved my hearing.
“Clients have shared similar stories, such as receiving specialist cancer care that added years to their lives. If cost is an issue, speak to a broker before cancelling completely.”
Justin Moy, Managing Director at EHF Mortgages in Chelmsford, said PMI’s popularity had clearly faded as NI contributions and living costs rose.
“Private medical insurance has gone from a near-necessity to a luxury. Businesses are facing higher employment costs and consumers are juggling higher mortgage rates and inflation. Something has to give, and unfortunately, PMI is often first in line.”
With the Autumn Budget expected to bring further fiscal tightening, experts fear the trend could accelerate into 2026. For many households and small businesses, advisers say, PMI now symbolises the broader cost-of-living squeeze — a product once considered essential, now out of reach.