Group private medical insurance (PMI) premiums are rising at such a level that some employers are considering ending cover entirely.
But these companies are in a very small minority as the vast majority of firms see the value of group PMI as NHS waiting lists remain at record levels intensifying the country’s productivity crisis and as employees increasingly expect these benefits when they are headhunted.
And it is clear advisers have a key role to play in ensuring employers have some level of cover in place including exploring budget options.
While the sector is calling on the new Labour government to cut insurance premium tax so more employers can keep cover in place, one advice firm wants government to go even further and look at standardising a core minimum level of PMI that employers have to provide to their employees to support staff wellbeing.
NHS is ‘broken’
While the country has a new government, the problems besetting the NHS remain as the aftershocks of the pandemic and industrial action have meant wait times for treatment have stubbornly stayed above 7 million.
This caused health secretary Wes Streeting to use his first speech in his new role to declare that the NHS is “broken” and to announce talks with union the British Medical Association.
Demand for group PMI remains high
Over recent years employers have stepped in to provide health and wellbeing solutions to alleviate the country’s productivity crisis. And the past year has shown no signs of this trend abating.
“For some time now, interest and demand for private medical insurance (PMI) and health and wellbeing support have continued to grow,” Axa Health tells Health & Protection.
“We have seen a significant rise in service usage, accompanied by the adoption of digital channels to access support, such as our online GP service and online outpatient care.
“Pre-pandemic, the number of GP appointments was in the region of 17,000 per month across all customers. This is now around 55,000 per month.
“We’re supporting members with quick and convenient online access for appropriate conditions. This includes areas of high demand such musculoskeletal, mental and digestive health.
“Our online muscle, bones and joints service, provided by HBSUK means that members can have a phone or video call with one of our specialists after answering a few quick questions online.
“A total of 98% of appointments are held within 48 hours of contact and the majority of members choose digital appointments after registration when offered the choice of either digital or face-to-face appointment.”
Cost effective solutions
While demand for PMI remains high among both employers and their employees, Ally Antell, Aviva UK Health, distribution director, maintains employers are still looking for cost effective ways in which to extend their health and wellbeing benefits to the whole of their workforce, to complement NHS provision and empower employees to take responsibility for their own health.
“Usage of wellbeing services and primary care support have soared,” Antell said.
“In 2023 we saw an average of 12,000 private GP appointments made every month through Aviva Digital GP.
“This his risen to around 16,000 per month in the first half of this year. Our optional dental benefit has also increased in popularity.”
Expecting more bang for their buck
And according to Dr Keith Klintworth, managing director at Vitality Health, there is no doubt that people and businesses are expecting more from their corporate health insurance.
“Employers are leaning in on it as they realise the impact of having a healthy workforce and its direct links to productivity, while at the same time, employees are looking for health and wellbeing support from their employers, with health insurance also being considered a key benefit,” Klintworth says.
“This unique mix of factors has changed what health insurance means to businesses in recent years, with more companies of different sizes taking out the product and looking for prevention and wellbeing support to drive better health throughout their workforce in particular.
“This sits alongside wanting access to clinical services to support their people to access treatment quickly, helping them get back to work faster.”
Demand is across the board
And where the war for talent is most intense, that talent is more confident in demanding healthcare benefits.
Mike Hesch, head of UK employee benefits at Engage Health Group, tells Health & Protection: “The demand to implement group PMI schemes has increased across the board since the pandemic.
“There is a higher demand from those organisations where talent is in high demand, in the tech space for example.
“There is a lot more interest in mental health provision since the pandemic and a real rise in clients asking for cover to support their staff diversity. For example, we see more specific provisions related to men and women’s health, and gender dysphoria-related services.”
Ellie Sultana, employee benefits manager at Advo, points out demand for group PMI is across the board.
“We have seen an increase in PMI enquiries, whether those be brand new, uninsured clients or those with smaller (eg. director only) schemes looking to expand and open up their existing provision to wider employees, including whole of workforce options.
“More and more people see PMI as an expectation from an employer and this is something we are seeing reflected via group enquiries.
“While traditional PMI was always utilised for the older demographics within the workplace, we are seeing a real mix of those utilising policies now, especially as insurers continue to grow wider wellbeing tools and direct pathway access.”
Rising premiums
Though one issue threatening to throw a spanner in the works is rising premiums. Earlier this year Health & Protection’s Health Summit heard some large corporate clients are seeing PMI premium renewal increases of more than 60%.
And it is clear such increases in premiums are a concern for some employers.
Kristian Breeze, director of healthcare at Ascend Health, points out some while employers are considering discontinuing their group PMI coverage due to cost constraints, advisers are playing a crucial role in demonstrating the value of PMI as an investment in employee health and productivity.
“They are highlighting the long-term savings associated with reduced absenteeism and increased employee satisfaction and retention,” Breeze said.
“Additionally, advisers are helping employers explore cost-effective solutions, such as co-payment schemes, where employees share the cost, and wellness initiatives that can lower overall claims and premiums.”
Emma Wood, director of healthcare Broadway Insurance Brokers, tells Health & Protection that while there is no getting away from the fact that that PMI is expensive and insurer standard increases coupled with medical inflation are high, companies are looking to expand head counts and looking at options for the uninsured population.
“Are some employers ending cover because premiums are too expensive? Personally, I haven’t seen this happen very often.
“It is a valued benefit and is also very difficult to remove once a plan has been put in place and it has been written into contracts.
“How are advisers responding and making the case for group PMI? For me, its all about going back to basics and understanding the needs of the business fully.
“Working together to find that long term solution and having open and honest conversations with the client.”
According to Kyle Godden, managing director at Clarity Health Insurance, overall, group PMI schemes remain competitive on price for those who are new to the market, but competitiveness in subsequent years hinges on the prior claims risk.
“We’re not really seeing any huge innovation in terms of product design,” Godden maintains. “Currently, insurers are aggressively competing on price to attract employers.
“However we are not always seeing the same competition upon the renewal of schemes with increases this year being larger than we have seen in previous years.
“Group PMI policies have always been about getting staff seen, treated, and back to work as quickly as possible. This remains the same today as 10 years ago.
“The difference is the number of new groups looking into PMI as a solution to help their employees.”
Pathways providing certainty
Debra Clark, head of wellbeing, Towergate Health & Protection, says there has been an “explosion” of options for employers to consider when looking at health and wellbeing support for their staff.
“However, this can mean duplication of certain aspects of cover, such as EAPs and virtual GPs. with employer and employees not knowing what is the best route to take, almost paralysed by choice,” Clark said.
“By having pathways in place it provides certainty and clear guidance to an individual.
“Often the pathways also mean people no longer need a GP referral, which is particularly valuable at a time when NHS primary care is stretched and struggling.
“This can mean being seen more quickly, and early intervention can prevent a small issue becoming a bigger issue.”
But Penny Jackson, owner of the Insurance Boutique, qualifies this by adding that pathways are good when they are followed properly.
“You do find a lot that members don’t get the choice of provider (eg physio) as the ones that are local to them are not on the pathway network. This can cause some issues particularly for those that are not new to PMI.”
IPT cut
Taking it back to what the new Labour government can do to ease the burden on employers wanting to do the best for their employees, Paul Nugent, CEO at Santé Group, says a good start would be to remove or reduce insurance premium tax.
“There should be more assistance from the government in publicising that health insurance is supporting the NHS rather than competing against it,” Nugent continues.
“Ultimately the next government should take steps to ensure group PMI remains an affordable solution, helping the UK address its productivity challenges.”
Mandating standard level of group PMI
But Claire Linaker, director advisory services at WTW, calls on government to standardise a core minimum level of PMI that employers have to provide to their employees to support their wellbeing, and to support Duty of care similar to auto enrolment in pensions, working on an opt-out basis.
“This should cover both health and financial wellbeing to ensure that all working employees within the UK have access to a minimum level of support/treatment and guidance,” Linaker said.
“A hybrid plan between health assessment, group income protection and it’s early intervention services and a PMI or cash plan with a financial element attached should best support a working employee through any critical moments in their working life.”
Ultimately for Matthew Reed, managing director, Equipsme, the industry needs to focus on providing practical everyday value – for both employees and employers.
“At the end of the day, keeping people and businesses healthy is not only good for productivity and the wider economy, but good for the NHS,” Reed says.
“Employers should absolutely be investing in that, and the government should be making it easier for them to do so.
“I’ve long been campaigning for the removal of P11D tax, for instance, which despite changes is still a huge and unnecessary blocker.”