PRIVATE MEDICAL (PMI) INSURANCE
Private medical cover for SME employees up 10%
Smaller to medium sized companies (SMEs) are facing higher premiums for providing their staff with private medical (PMI) insurance in 2011, according to new data released by Mercer.
On average, premiums for SMEs – defined here as companies employing up to 200 staff - have increased by 10% since 2010. By contrast, large companies in the UK and Ireland are experiencing PMI increases of 4.9%.
SMEs are now paying average annual PMI premiums per member of £1,532 up from £1,499 in 2010. Per employees, annual premiums have increased by an average of £78.
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Upward pressures
According to Mercer, the increase in PMI premiums for SMEs is driven by a variety of factors, not least the increases set by insurers now looking to regain margins that were eroded in the recession, when premiums were cut in order to retain business. “In the background, however, rising costs of healthcare, concern over the impact of NHS Reform and an aging workforce are adding to the upwards pressure on the cost of PMI.”
Keeping a lid on costs
Mercer reckons that SMEs can mitigate these increases by adopting practices that are common with individual financial decisions that of putting pressure on their adviser to get them the best deal.
Donna Biggs, principal at Mercer, said: “We push our financial advisers for the best deals in our personal life but SME owners seem to largely forget these lessons when assessing PMI for their staff. Companies should look at their broker and challenge them to see if they are capturing the best deals on the market.”
From the data, the implications for SME are obvious. Mercer cites the example of a well-known retailer which paid £779 per member on average to provide medical cover for their staff, compared with £1,080 in 2010 saving 28%.
As SME often provide key members of staff with PMI cover, premiums are subject to substantial increases if an employee’s health changed. One firm of solicitors providing PMI cover for three senior members of staff saw the cost of providing cover increase nearly 40% per person from £1,852 to £2,578.
Lower rises for larger companies
The cost of providing healthcare and health-related benefits to employees is also affecting larger companies but premiums have not leapt to such a degree. Data from Mercer’s 2010 pan-European survey on employer health benefits showed that medical inflation across 14 European countries rose by 3.3% in 2010. Companies in the UK and Ireland experienced a higher-than-average increase of 4.9%.
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Data was analysed from mercer-elect, a “specialist service from Mercer which enables SMEs to provide staff employee benefits of a standard only usually available to larger companies”. mercer-elect services over 1,500 SMEs employing thousands of staff across the UK.
The findings on PMI costs for this Mercer report were taken from 136 companies renewing their private medical insurance for 2,275 staff during the first quarter of 2011.
Mercer describes itself as a “leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits”. Mercer’s 20,000 employees are based in more than 40 countries. For more details visit http://uk.mercer.com.