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Private medical insurance rates set to rise

EMPLOYEE BENEFITS

Private medical insurance rates set to rise

Eight out of ten UK employers cite the rising cost of premiums as one of their biggest concerns when renegotiating private healthcare arrangements for their employees, according to a survey by Aon Consulting.

Aon found that the average single subscription rate currently stands at between £301 and £350. The firm expects this to rise above £350 by the end of 2005. Yet half of employers polled (52%) said their employees did not appreciate private healthcare arrangements.

Controlling premiums

Organisations are increasingly using an excess as a means of controlling premiums and driving down claims expenditure by deterring "trivial" claims and making members "think twice" before seeking private treatment, with 43% of respondents choosing to operate an excess in 2004, compared to 36% in 2001. Another key mechanism being introduced by large organisations to control costs is self-insurance.

Jane Gibbs, head of the healthcare & risk benefits practice at Aon Consulting, said: "Companies are under more pressure than ever before to remain vigilant when it comes to costs, whilst continuing to provide competitive benefit packages to attract and retain a highly skilled workforce. As premiums rise, employers are seeking new methods -- such as self-insurance -- of controlling their benefit provision expenses by being more cost effective."

Key survey results

Group life assurance

  • Employers cited medical underwriting requirements (37% of respondents), the imposition of event limits restricting cover on catastrophe (33%) and the late notification of premium requirements (32%) as the three biggest issues for them. 
  • More than three-quarters of respondents (76%) provide some form of life cover for employees.
  • Seven in ten employers (70%) said they continue to provide comprehensive lump-sum benefits to their entire workforce.

Group income protection

  • Issues facing employers in the group income protection (GIP) marketplace include increasing costs (38% of respondents), claims assessment (36%) and integration of their GIP policy with their absence management programme (29%). 
  • Only four in ten respondents (41%) have been with their current insurer for less than three years.
  • Six in ten employers’ (60%) main motivation for moving insurer was to achieve a financial saving.

Private medical insurance

  • Respondents highlighted increasing costs (81% of respondents), lack of employee appreciation (52%) and an increasing number of claims (45%) as the top three issues facing employers providing private healthcare arrangements.

A final word

"There are a number of relatively simple steps that employers can take to improve employee appreciation of their benefits and the most effective of all is via a concerted benefits communication campaign. After all, there is very little point in spending millions of pounds on insuring your workforce if you don’ t tell them about the benefits with which they are provided. Ensuring that employees realise the value of the benefits provided is crucial to building their appreciation of the benefits offered." -- Jane Gibbs, head of the healthcare & risk benefits practice, Aon Consulting.

Want to know more?

Title: Annual Benefits Survey 2004, Aon Consulting.

Survey sample: The survey was conducted amongst 288 employers, representing a workforce of 420,000 staff or 130,000 insured members.  Of those surveyed, almost 30% employ more than 1,000 employees, while 12% employ less than 50 people.

Availability: Contact Lisa Ford on tel: 0800 279 5588 or email: enquiries@aonconsulting.co.uk for a copy of the survey.

Aon Consulting is a leading human capital consultancy, helping organisations to attract and keep the employees they need. The firm advises on all aspects of employment, including health-related insurance and risk employee compensation and pensions human resource strategy planning job design and change management and staff assessment and legal issues. To find out more visit www.aon.com/uk/en/

Posted 1 April 2005