Medical and protection benefit costs: 7 ways to help mitigate rising premiums
Rising medical and protection insurance premiums are hitting organisations hard with reports of costs rising 15%-25% year on year – so if you're feeling caught between employee expectations and budget realities, you're not alone.
Private medical insurance, group income protection, and critical illness cover costs are climbing faster than general inflation.
Higher claims, increased utilisation, and that post-pandemic focus on wellbeing have created the perfect storm for premium hikes.
But here's the thing - employees value these benefits more than ever.
Research shows that 88% of employees now consider health benefits a key factor when choosing a new job, and two-thirds (64%) of younger workers define health cover as their most valuable benefit.
The good news is that there are smart strategies to tackle rising costs without gutting your benefits programme.
It's about working smarter, not just spending less.
Here are seven practical ways to get ahead of the curve and keep both your CFO and your people satisfied.
1. Start with what you've actually got
When did you last properly audit your benefits package?
You might discover expensive add-ons sitting unused while your people cry out for different support entirely.
How to make it work:
- Analyse usage patterns over the past 18 months
- Identify overlapping cover that's eating budget unnecessarily
- Survey employees about what they actually value and use
Top tip: Treat your benefits audit like a health check for your entire programme - you can't fix what you don't measure.
2. Give your people choice (and save money doing it)
Flexibility isn't just trendy - it's financially smart.
Why pay for expensive family cover for single employees, or comprehensive travel insurance for homebodies?
How to make it work:
- Introduce flexible benefits platforms that let employees build their own packages
- Offer core and voluntary tiers for different benefit types
- Use contribution matching to maintain employer investment while reducing fixed costs
Top tip: When employees choose their benefits, they value them more - and you pay for what actually gets used.
3. Let technology do the heavy lifting
Smart platforms help you spot trends before they become expensive problems. Real-time dashboards keep you agile for early renegotiation or strategic shifts.
How to make it work:
- Use platforms that provide real-time claims and usage analytics
- Automate enrolment processes to reduce administrative burden
- Set up alerts for unusual patterns that might signal premium increases
Top tip: Data-driven decisions beat gut instinct every time when it comes to benefits spend.
4. Keep your people healthier in the first place
Prevention beats cure - especially when it comes to claims costs.
Proactive wellbeing support reduces insurer risk and keeps premiums manageable.
How to make it work:
- Invest in comprehensive employee assistance programmes (EAPs) and mental health support
- Offer health screenings and preventive care options
- Provide financial wellbeing resources to reduce stress-related claims
Top tip: Healthy, supported employees mean fewer expensive claims and happier insurers.
5. Make renewals a conversation, not a transaction
Early engagement with brokers and insurers opens doors to better arrangements.
Stop treating renewals like a tick-box exercise and start negotiating strategically.
How to make it work:
- Start renewal conversations 6-9 months early
- Ask insurers to model multiple scenarios and excess levels
- Consider switching between ‘medical history disregarded (MHD)’ and ‘moratorium’ underwriting
Top tip: Insurers appreciate proactive clients—use that to your advantage in negotiations.
6. Explore the cost-effective crowd-pleasers
Group risk benefits punch above their weight for value.
Don't overlook salary exchange arrangements either - National Insurance savings can be reinvested strategically.
How to make it work:
- Review your group risk provision for gaps and opportunities
- Work with payroll to explore salary sacrifice options
- Calculate NI savings and reinvest them strategically
Top tip: Sometimes the most appreciated benefits are the most affordable ones.
7. Monitor continuously, don't wait for renewal shocks
Quarterly reviews beat annual surprises every time.
Regular monitoring gives you early warning signs and negotiating leverage.
How to make it work:
- Schedule quarterly benefits performance reviews
- Track claims trends and utilisation changes
- Be prepared to make mid-year adjustments when needed
Top tip: Stay ahead of the curve instead of reacting to it.
Making it all work together
Rising premiums don't have to mean reduced benefits or blown budgets.
With the right mix of technology, proactive planning, and employee engagement, you can preserve value while keeping costs manageable.
The key is treating benefits as a strategic investment, not just an annual expense.
When you combine data-driven decisions with genuine employee engagement, everyone wins - your people stay protected, and your budget stays intact.
Supplied by REBA Associate Member, Avantus
Flexible Benefits & Technology specialist providing online, highly configurable platforms to Customers and Intermediaries worldwide.
