A massive increase in government health spending will force private medical insurers to rethink their products.

Tim Ablett, chief executive of FirstAssist, said that the NHS has already made progress on reducing waiting lists for knee, heart and hip operations - traditionally strong sales points for private medical insurers.

He added that the health service would improve further and that this would reduce the attractiveness of traditional PMI policies.

"There will be a further swing to corporate policies that look after the health and wellbeing of employees," he said.

"NHS has problems delivering. It will need private sector partnerships. There will be opportunities in managing sickness, rehabilitation and return to work strategies," Ablett said.

In this week's comprehensive spending review, Chancellor Gordon Brown promised to raise health funding by £22.9bn between 2005 and 2008.

Ablett also welcomed the government's crackdown on sickness absenteeism. Brown also promised to produce a plan to cut uncertified sick leave in the civil service.