PMI sector threatened by inaccurate pricing

In a statement, the company's director of healthcare, Alistair Sclare said: "In this climate, it's probably natural to assume that premium rates will be under pressure as insurers fight to retain business and make products more affordable. However, the fact is that even in a recession, medical advancements do not instantly stop, consultants do not enter price wars and the hospital groups certainly show no obvious sign of reducing their charges.

"Consequently, to cut rates is a potentially dangerous knee-jerk reaction that runs a serious risk of jeopardising the long-term future profitability of our industry. And ultimately this could do our business customers more harm than good. If costs continue to rise, premiums must reflect this."

He followed, however, that providers need to "smarter" about the PMI is sold in order to help policyholders reduce their costs when possible. He advised customers to rely on broker expertise when choosing a policy. Other suggestions included, offering higher excesses which coincide with lower premiums, budget cover options and instalment.

Groupama warned that any price reduction would require a benefit reduction as well, as the industry must ensure that it can cover potentially costly claims, common in the PMI sector.

Mr Sclare added: "Customers expect premiums to reflect claims made - that is how the insurance sector works. This means claims information being available in all sectors of the market. When PMI stands out as being different, customers get suspicious, they wonder what we are hiding and this will influence their purchasing decisions."