In this article, we’ll break down the most common causes of health insurance premium increases, explore whether premiums go up after a claim, and provide practical strategies you can use to control costs without sacrificing valuable coverage.
What Causes a Health Insurance Premium Increase?
A health insurance premium is the regular payment you or your employer makes to keep a health policy active. These premiums can fluctuate over time, usually increasing at the annual renewal. Several contributing factors explain these upward trends, including:
1. Age-Related Pricing
One of the most consistent drivers of insurance premium increases is age. As individuals or groups get older, insurers anticipate a higher likelihood of medical issues and therefore adjust pricing accordingly.
Older members are statistically more likely to file claims, undergo treatment, or require specialist care. As a result, many providers automatically raise premiums each year to reflect the group’s aging profile.
2. Medical Inflation
You may have noticed that the cost of healthcare continues to rise, even without major claims on your policy. This phenomenon is known as medical inflation.
Advances in diagnostic tools, treatment methods, pharmaceuticals, and specialist consultations mean that medical procedures cost more year over year. These rising expenses contribute directly to health insurance premium increases, even when your claims remain minimal.
3. Claims Experience
Have you filed claims recently? If so, you may be wondering: “Does health insurance premium increase after a claim?”
The answer is, sometimes, especially in group or experience-rated policies. Insurers look at the overall claims history of your policy to evaluate risk. A high frequency or high cost of claims—whether from hospital stays, outpatient services, or chronic conditions, can lead to a higher premium at renewal.
While individual policies may be somewhat shielded from claim-related increases due to community-rated pricing, many private health plans (especially in the UK and other international markets) are tied to claims. So, do health insurance premiums increase after a claim? In many cases yes, particularly in policies with a no-claims discount (NCD) structure.
How Much Do Health Insurance Premiums Increase Each Year?
There’s no one-size-fits-all answer to this question. It depends on several variables: the insurer’s pricing model, your age group, the country you’re in, inflation in the healthcare sector, and the overall cost of claims can result in health insurance premiums increasing each year.
That said, annual increases of 10% to 20% are currently not uncommon. In some cases, such as when expensive treatments or chronic conditions are involved, policyholders may see higher spikes. While some insurers provide a breakdown of the increase (e.g., 4% for age, 6% for inflation, 3% for claims), many do not. This is where a broker’s insight can be invaluable.
Are Private Health Insurance Premiums Deductible?
If you run and are an employee of a Limited company then in the UK the gross premiums can be used as a trading receipt to offset corporation tax. Always consult with a tax advisor or accountant to understand how this applies in your situation and take the advice of a specialist insurance broker.
What Can You Do About Rising Premiums?
When your health insurance premium increases, the good news is that you’re not without options. Whether you’re managing a company policy or a personal plan, there are several proactive steps you can take.
Shop Around and Compare Providers
One of the most effective ways to respond to a health insurance premium increase is to explore the market. You might be surprised to find that another insurer offers comparable coverage at a lower rate, without requiring new medical underwriting.
Brokers with access to multiple providers can help you retain your existing underwriting terms, avoiding unnecessary exclusions or waiting periods. This is especially important if any members of your group have pre-existing conditions. The switching process can be complex, so if you’re unfamiliar with policy structures, consider working with a regulated health insurance broker.
Negotiate With Your Current Insurer
Another option is to speak with your current provider about the possibility of a discount or adjustment. While this is not guaranteed, insurers may be open to discussions, especially if your claims history is favourable or if you can demonstrate that more competitive rates are available elsewhere.
Brokers can support these conversations by conducting market comparisons, showing competing quotes, and leveraging their industry relationships. Even a small reduction in your premium can add up significantly over a year, especially for group plans.
Adjust Your Policy Benefits
If you’re facing a large insurance premium increase, reviewing and modifying your current benefits can be a great way to bring costs down. Insurers typically offer multiple ways to tailor your plan:
- Increase your policy excess
- Limit outpatient care or diagnostic testing
- Switch to a different hospital list or treatment network
- Remove optional add-ons, such as dental or mental health coverage
- Consider the “6-week option”, where private treatment is only covered if NHS wait times exceed six weeks, but look closely at this!
These adjustments can lower premiums while still providing comprehensive cover for serious medical issues. Again, a broker can help you understand the impact of these changes and determine which trade-offs are worth making.
Examples of Real Life Health Insurance Premium Increases
Here are two recent examples where we achieved significant premium savings without changing insurers:
Example 1 – Personal Case
This case involved an 80-year-old gentleman whose monthly premium had risen from £502 to £692 – a 38% increase. The breakdown of the increase included a 3.4% age-related rise, 20.4% base increase, and 14% claims loading due to multiple claims, including an ankle replacement. He was insured with Vitality and had £500 outpatient cover and a £1,000 excess.
Switching insurers would have resulted in exclusions, so it was important to retain full cover. Despite the high number of claims, we successfully negotiated a discount. By removing the £500 outpatient cover – which wasn’t offering real value due to the £1,000 excess – and removing cover for computerised scans, we managed to reduce his premium to £530 per month.
This meant no change of insurer, no new exclusions, and no drastic change in benefits – resulting in a saving of nearly £2,000 per year.
Example 2 – Small Business in Dorset
A small business with four employees and dependents was insured with AVIVA. Following a few high-claim years, their premium increased from £639 to £1,054 per month. As their broker, we secured a 12.5% discount despite claims exceeding the premium in the previous two years.
Additionally, we restricted outpatient cover to £1,000 per person per annum and increased the excess by £50. These adjustments brought the premium down to £619 per month – a 40% saving or approximately £5,000 per year – again, without switching insurers.
We did obtain an alternative quote of £420 per month from another provider, but it would have included an exclusion. The client chose to stay with AVIVA on a lower premium than the previous year and retained their unique broker-negotiated benefits, including free dental, optical, and mental health cover.
Summary: You Have More Control Than You Think
While no one enjoys seeing their health insurance premium increase, it’s important to understand the reasons behind the rise and recognize that you have options.
To recap, here are the key steps to managing premium hikes effectively:
- Understand why premiums are increasing: due to age, claims, and medical inflation
- Evaluate alternative providers while preserving your underwriting terms
- Engage in renewal negotiations with your existing insurer
- Tailor your coverage by adjusting benefits and optional features
- Maximise the tax advantages if you’re running a business or filing taxes
If you’re unsure where to begin, working with a specialist broker can help simplify the process. Their experience in navigating the renewal process, negotiating with insurers, and tailoring benefits can ensure you maintain a policy that delivers value, control, and protection for you and your team.
Disclaimers:
Disclaimer 1: This article is for informational purposes only as of June 13, 2025. Future changes in policy terms, market trends, or legislation may affect the accuracy of this content. For real-time advice, please speak directly with a licensed broker or insurer.
Disclaimer 2: This content is general in nature and does not constitute financial, legal, or medical advice. For details specific to your health insurance policy, consult your provider or a qualified insurance adviser.
