Why your premium goes up at renewal

A renewal letter rarely repeats last year's price. The insurer recalculates the cost of your cover for the year ahead, and that recalculation draws on several things at once.

What changes between one renewal and the next

You are a year older, which moves you through the insurer's pricing. The cost of the treatment your policy would pay for has usually gone up too. And the insurer looks again at what people like you, and sometimes you specifically, have claimed over the past year. None of these move in isolation, so a higher figure on the letter is rarely explained by just one of them.

The separate inputs behind the figure

  • Age band: premiums step up as you move into a new age bracket, regardless of whether you claimed anything.
  • Medical inflation: the cost of the treatment, consultants and hospital stays your policy covers rises each year, and the premium follows it.
  • Claims experience: what you, and policyholders in your group, have claimed in the past year feeds into the renewal price.
  • Insurance Premium Tax: a tax added to the premium itself, set by government.

Knowing these are separate inputs is useful on its own. A rise does not necessarily mean you claimed more, or that your health has changed for the worse in the insurer's eyes. It can just as easily be the age band or the tax moving under a premium that would otherwise have stayed flat.

Behind the number

How age bands, medical inflation and claims experience combine at renewal

A renewal letter rarely explains itself. The new premium is the result of three separate adjustments made at the same time, and seeing them apart makes the total easier to follow.

  1. Age moves you into a higher pricing band

    Insurers group policyholders into age bands, often in five-year steps, and price each band separately because the likelihood and cost of treatment rises with age. Moving into a new band at renewal increases the premium even where nothing about your health or your claims has changed.

    Staying in the same band

    This particular adjustment doesn't apply this year, though the other two can still raise the premium.

    Crossing into a new band

    The renewal reflects the new band's pricing, added on top of any other increase.

  2. Treatment is getting more expensive across every policy

    Hospital charges, consultants' fees and the cost of newer drugs and procedures tend to rise faster than general prices. Insurers build this rise, usually called medical inflation, into every renewal.

  3. Your own claims history can feed into the recalculation

    A claim made in the past year, or a pattern of claims across similar policyholders running higher than expected, can be priced into the renewal specifically. This sits on top of the age-band and medical inflation adjustments.

    No claims made

    The rise is driven mainly by the age-band and medical inflation adjustments.

    Claims made

    The rise can carry an additional amount reflecting the treatment claimed for.

  4. All three are combined into one new premium

    The age-band movement, the medical inflation adjustment and any claims-based change aren't shown as separate line items. They're combined into the single figure printed on the renewal notice, which is why the increase can look larger than any one cause would suggest on its own.

    Insurance Premium Tax is calculated on top of this recalculated premium, as a separate step.

None of these adjustments is shown working on a standard renewal letter. They arrive already folded into one new number.

Insurance Premium Tax: the part of the bill that isn't your insurer's decision

Part of the renewal increase has nothing to do with your age, your claims or your insurer's costs. It is tax. Medical insurance, like most general insurance in the UK, carries Insurance Premium Tax (IPT) at the standard rate of 12% (GOV.UK, read 2 October 2026).

Where the rate is set

IPT is not something your insurer decides. It is set by HMRC and applied across the general insurance market, medical cover included. Your insurer collects it as part of your premium and passes it on; it does not keep any of it.

How it shows up on your premium

The 12% is applied to the premium your insurer has already calculated from your age, claims history and the cost of the cover itself. So if that underlying premium rises at renewal for any of the usual reasons, the tax on top rises with it. It is worth separating the two when you read your renewal letter: one part is what the insurer is charging for your cover, the other is what HMRC charges on top of that.

If the rate itself changes between one renewal and the next, that movement alone can account for part of an increase, even where nothing about your health or your insurer's pricing has changed at all.

Questions about your renewal premium

Why does my premium go up even if I haven't made a claim?

An insurer sets your premium using more than your own claims record. It also takes into account your age, the rising cost of the treatment your policy covers, and the claims made across everyone in its pool of members. A renewal increase can happen in a year where you made no claim at all.

Does changing underwriting basis at renewal lower what I pay?

The underwriting basis a policy is written on, moratorium underwriting or full medical underwriting (FMU), is set when cover starts. It governs which conditions are excluded, so changing it is not something you do within an existing policy at renewal. If you are weighing the two bases for a new policy, it is worth seeing how each would treat your own medical history before you decide.

Will moving to a new insurer at renewal reset my cover?

A new insurer underwrites you afresh. A condition that was close to coming into cover under your existing policy can become excluded again, under a new look-back period that starts from scratch. That is worth checking against your own situation before you move.

Is the renewal increase all about my own claims history?

Your own claims are one factor an insurer weighs, but they are not the whole explanation. Insurers also price for the rising cost of medical treatment generally, and for the claims made across their whole book of members. Someone who made no claims at all can still see a renewal increase for these wider reasons.

Why does Insurance Premium Tax appear on my renewal?

Insurance Premium Tax (IPT) is a tax applied to most general insurance premiums, including private medical insurance, and it is set by the government rather than by any insurer. It is charged as a percentage of the premium, so when the underlying premium rises, the tax charged on it rises too. The current rate is published on GOV.UK, along with the date it last changed.

Can I negotiate my renewal premium?

Insurers price renewals against published factors such as age and claims experience, so there is usually nothing to haggle over directly. What can change the amount you pay is adjusting the cover itself, such as the excess you carry or the add-ons included in the policy. Any change like that is worth checking against what it does to the cover you actually use.

Does raising my excess bring the renewal premium down?

Carrying more of the cost yourself before cover starts typically lowers what an insurer charges. Whether it is worth doing depends on how likely you are to claim, and how much of a typical treatment cost the excess would cover. Weigh the saving on the premium against the amount you would need to find at the point of a claim.

Does dropping an add-on reduce the increase at renewal?

Removing an add-on, such as out-patient cover or extended cancer cover, can lower the premium because it narrows what the insurer is pricing for. It does not undo cover you have already used, or reverse progress a condition has made through a moratorium. Check what the add-on actually covers before removing it.