Reimagining insurance: Negotiating premiums, rewarding prevention, and personalising coverage

As NHS waiting lists remain stubbornly high, PMI is becoming more of an essential risk management tool to manage and maintain workforce health.

Employers across the UK are feeling the impact of the growing healthcare challenges faced by their workforce.

Recent research by the Group Risk industry body GRiD found that:

63% of UK employers believe there is insufficient state support for the health and wellbeing of UK workers
57% say their employees could not access support for mental health problems
52% report a lack of preventative care, and
47% point to a lack of support for physical health issues

By adopting innovative strategies to optimise private medical insurance (PMI) and other healthcare benefits, businesses are not only securing better premiums but also promoting preventative health and tailoring insurance solutions to meet diverse employee needs.

These efforts come at a critical time, as the UK’s ongoing public healthcare crisis continues to impact access to primary and secondary care.

NHS waiting times remain stubbornly high, with the latest figures from the British Medical Association (BMA) showing a backlog of 7.46 million cases as of December 2024.

In response, recent data from the Private Healthcare Information Network (PHIN) reveals that private hospital admissions increased by 9% in Q3 2024 compared to the same period in 2023.

According to Laing and Buisson’s 2024 Health Cover UK Data Insights report, more than 8.06 million people, or 11.8% of the UK population are now covered by private medical insurance.

It is becoming less of a ‘nice to have’ and more an essential risk management tool for employers to manage and maintain workforce health.

Higher premiums costs

As utilisation rates on healthcare schemes have increased year on year, claims Inflation rates have climbed to historically high levels, reaching over 15% in 2024.

Higher claims volumes have increased both administration and claims costs for UK medical insurers and, when coupled with the increasing costs of some treatments, has resulted in higher premium costs throughout 2024 and into 2025 for most schemes.

Data insight has never been more important to help employers who fund healthcare benefits understand their claim trends and manage the health of their workforce.

To manage benefit costs, both now and into the future, continuously reviewing and interpreting your various data points is essential for informed decision making and effective cost containment strategies.

Some of the key things to focus on when negotiating premium changes at any renewal include:

Understanding your claiming trends and potential future funding costs. How are these changing? How do they compare to what is seen generally in the market, are there any dreaded high value claims? If so, what is the true impact on renewal pricing?
Provider administrative cost negotiations. Rising claims volumes mean increasing administration charges, but what is fair for your scheme? Renewal pricing must be fair to you as the client but also fair to the provider to ensure that their running and development costs are met.
Understanding the wider health of your organisation and how this may be driving your claims trends.
Do you know the ROI impact your PMI may be having on your sickness absence costs? Have you asked your employee benefits consultant to help you measure this?
Claims funds – it's not about how low you can get it, but how sustainable it is to prevent future fluctuations in funding costs. Stabilisation is essential to managing budgets.
Pricing mechanisms – is your current pricing model the most suitable for the needs of your organisation and the size of your workforce?
Benefit levels – strike the balance between budgets and needs.

Working in partnership with your adviser and your insurer is essential.

Open communication has never been so important, and engaging with your insurer as a partner in your wellbeing strategy can help with negotiations by increasing their understanding of your business, allowing them to take this into consideration when pricing a scheme.

Whilst knowledge and negotiations are essential for managing costs of PMI, preventative care is becoming a key strategy for reducing long-term health related costs and improving employee wellbeing.

Initiatives to lessen the burden

According to the Public Health Outcomes Framework (PHOF), preventative health measures deliver tangible results in reducing hospital admissions for preventable conditions.

Employers are increasingly investing in initiatives such as subsidised personal trainers, nutritional advice and education, health screenings, and educational workshops on managing mental health.

These are all designed to address the root causes of poor health or ensure early diagnosis and intervention to create a healthier workforce, reducing long-term claims costs and funding pressures.

To ensure employees engage with such initiatives good communication is essential.

A flexible benefits platform is one of the most effective ways to deliver personalised communications, enabling employees to access the most appropriate preventative benefits for them.

Using the platform to send relevant messages, rather than relying on ‘All Staff’ emails, is more likely to prompt action.

In the past, setting up such a platform was costly and time-consuming, but advancements in technology have made this more manageable.

Employers can even recoup much of the implementation and management costs through National Insurance Contribution (NIC) savings on benefits funded by salary sacrifice.

Incentivising preventative health

There are many ways to enable and encourage preventative health.

One option is the introduction of discounted wearables and health tracking apps, enabling employees to monitor their fitness and personal health metrics.

Some benefit providers are incentivising participation by offering elements of gamification to encourage participation and providing rewards for achieving specific health goals, fostering a culture of wellness within the workplace.

Creating internal team challenges not only increases involvement but also can help inter-team communication and relationships.

Notably, 72% of employers report reductions in healthcare costs after implementing wellness programmes, as highlighted by The King's Fund.

No matter what solution works for your organisation, it is always important to ensure that you seek advice that is tailored to your company needs.

It is no longer about ‘off the shelf solutions’ and the first step is to obtain professional advice through a trusted and knowledgeable adviser.