The coronavirus pandemic will have only a minimal impact on UK health insurers' earnings in 2020-2021, Fitch Ratings says in a new report.

Claims have reduced due to restricted hospital access, but we do not expect increased profits for insurers – any "excess" profits are likely to be used to meet the expected surge in demand from postponed elective surgeries or returned to policyholders through premium rebates.

Fitch expects UK health insurers to have a period of higher claims as lockdown restrictions are eased, allowing postponed surgeries to be resumed. We also believe the delay of these surgeries could result in costs being higher than comparative costs before the pandemic.

However, the rating agency expects insurers will use the benefit from a reduction in claims costs over the lockdown period to offset any increase in claims costs from delayed surgeries.

Fitch believes that after the pandemic, increased pressure on the National Health Service could increase demand for private medical insurance.

However, the prospect of weaker employment represents a potential offset to this scenario, as a majority of subscribers access health insurance through employer schemes.

Fitch views UK health insurers' profitability as strong.

However, it believes the sector faces challenges including rising medical inflation, a weaker pricing environment, a diminished product value proposition and a change in future claim patterns, which could lead to lower profit margins in the long term.