Insurers must be clearer on what is driving medical inflation and what they are doing to ease the burden on customers, Howden UK health and benefits CEO and global practice leader Glenn Thomas has told Health & Protection.
With Howden predicting medical inflation will reach 7% in 2026, Thomas told Health & Protection providers needed to be clearer around what is driving the costs, what their renewal pricing strategies are, and how they are helping to ensure premiums remain sustainable from a cost containment perspective.
Thomas added that advisers and insurers must innovate to help clients fully appreciate the cost, the value, and the impact of their benefits.
His call came as Howden released its Changing Face of Employee Health report which revealed more than two thirds (67%) of businesses around the world were investing in preventative healthcare to tackle soaring medical inflation.
The report also shows more than three in five of those surveyed (61%) are now more likely to stay with an employer who offers a good healthcare package, and nearly half (47%) view it as an important factor in looking for a new role. Only 7% of global workers do not think it is an important benefit.
Investment in prevention
Employers were found to be increasingly taking steps to mitigate rising costs, with the majority investing in prevention and wellbeing.
Two thirds (67%) of the 441 global employers surveyed had used this strategy, and 55% also listed it as being the strategy which worked best for them, which was largely mirrored across the world.
In terms of which regions are investing most in prevention and wellbeing measures, Europe led the way (74%) followed by the UK (72%), LatAm (71%), Pacific (69%), Asia (56%) and IMEA (55%).
Medical inflation was found to be driving this investment increase.
While the vast majority of employers believe their current healthcare plans meet the needs of their staff, a quarter (25%) of the 1,460 employees quizzed did not agree their employer supported their wellbeing.
ROI
The report also highlighted a discrepancy between what employers were planning to do against how they feel their current plans are working.
The majority of global employers (86%) believed they were getting a good return on investment (ROI) from their private healthcare outlay, and 93% of global employers also believed their current health plan met the needs of employees.
But nearly a quarter (23%) of employers had already switched healthcare providers to get a better deal and 39% were planning to do so, while 26% had not yet made plans to switch – but would consider doing so if they got a better deal.
Furthermore, 93% of global employers said they expected their medical costs to rise, with 41% anticipating a significant rise.
While this was a major consideration across the globe, it affected regions differently. For example, businesses in IMEA expected medical costs to rise by 58%, compared to 27% for those in Europe and 28% in the UK.
But significant cost rises were also noted across other regions – 52% in Asia, 46% in LatAm and 36% in the Pacific region.
Clearer on cost drivers
When asked how providers should respond in supporting advisers and their clients, Thomas told Health & Protection they needed to be clear and transparent around what is driving the costs, what their renewal pricing strategies are, and also how they are helping to ensure premiums remain sustainable from a cost containment perspective.
“Removing these benefits could be a real detriment to the workforce as the expectation from employees of not only the quality of healthcare they receive, but also the range of treatments covered, is significant,” Thomas continued.
“Communicating with employees on how to responsibly use what is still an insurance policy is a key part of the journey to try and drive more sustainable medical insurance premiums.”
Thomas added the survey highlighted two key issues – delays in care drive up costs, and that the majority of employers believe good health benefits are key to staff retention.
“As advisers, we’re on the front line of these conversations. In partnership with insurers we must innovate to help clients fully appreciate the cost, the value, and the impact of their benefits – which has to be communicated effectively,” he continued.
