Why PMI is giving employers something to think about
Given the current funding issues facing the NHS, private medical insurance (PMI) has become an increasingly popular benefit for employers and employees alike.
It allows employees access to effectively side-step some NHS waiting lists to receive diagnostics and treatment more quickly, resulting in better health outcomes compared to those who have to wait, often for significant periods of time, before receiving treatment.
The knock-on effect is that employers benefit from lower employee absence rates and happier and healthier employees, which ultimately means higher productivity levels and better results for the business.
Market trends
While the core basis of PMI schemes has remained broadly unchanged for some time, the PMI market is constantly evolving, with new trends emerging which are key to consider when employers are considering introducing or reviewing cover.
Mental health support
One of the most significant recent trends in the PMI market is the increased emphasis on mental health support.
Employers are increasingly recognising the importance of offering PMI cover which includes comprehensive cover for mental health.
This will typically include access to therapists, counsellors, and psychiatrists with the aim of significantly improving employee wellbeing and productivity.
Neurodiversity support
Likewise, there is a drive to introduce neurodiversity support.
However, it is important to be clear that neurodiversity does not refer to mental health conditions, and that neurodivergent employees do not necessarily have poor mental health.
Digital health solutions
Another important trend is the introduction of digital health solutions.
Many PMI providers now offer access to digital tools and technologies such as virtual GP consultations, online health assessments, and mobile apps for managing health conditions.
Taking advantage of these solutions offers employees convenience and better access to support.
Innovative approaches
Employers are increasingly open to ways to innovate rather than stick to the tried and tested standard provision of cover to better manage the performance of their schemes.
There are ways to reduce claims under a PMI scheme by using standalone services such as for musculoskeletal (MSK) or cancer support.
These services can not only provide targeted care but also help limit claims under a PMI scheme, helping to ensure future premiums are more manageable and schemes remain viable from a cost perspective.
Addressing rising healthcare costs through a claims/funding analysis
In addition to the above trends, employers need to consider the impact of rising healthcare costs.
PMI premiums have been increasing in recent years, driven by factors such as inflation, ageing populations, and advancements in medical technology.
To mitigate these rising costs, employers may need to explore innovative strategies, such as self-insured models or partnerships with healthcare providers.
Regardless of other considerations, at a minimum it is important to challenge the assumptions behind a provider's claims fund calculations.
This can be done by, for instance, using actuarial analysis to review claims experience, the membership profile, and scheme design to provide more accurate models.
This approach can lead to significant savings. For example, some of our clients have achieved savings of approximately 15% or more in 2024, without compromising future sustainability, compared to insurers' initial renewal rates. Conversely, our analysis can confirm whether the insurer’s proposed funding levels are set correctly.
Other considerations when selecting or reviewing a scheme
In addition, when selecting a PMI provider for a new scheme or undertaking a market review of an existing one, employers should also consider the following:
- Level of cover: Is the right level of cover being provided and does it meet the needs of employees, considering factors such as employee demographics and any known health needs?
- Cost-effectiveness: Does the scheme structure meet the current needs of employees and the ability of the employer to fund cover? Is there a need to restrict say outpatient cover levels or introduce a policy excess to help manage costs?
- Value-added benefits: Does the provider offer any additional benefits which come at no additional cost, for example wellness programs, fitness discounts, and health screening services. While these can be promoted to help improve employee health and wellbeing, it is worth checking to ensure there is no duplication of services which may be offered via other employee benefits.
- Network of providers: While a strong network of hospitals, clinics, and specialists is essential to ensure that employees have access to high quality care, should the network be restricted to help manage costs?
- Customer service: Often overlooked, particularly when cost is the main driver, but good customer service is key for making sure employees have a positive experience should they need to make a claim. Good customer service needs to be a deliverable when putting in place a new or reviewing an existing scheme.
By keeping abreast of trends in the PMI market and carefully considering options, employers can choose a PMI provider which meets the needs of the employees and at the same time helps contribute to a healthier, more engaged, and productive workforce.
In partnership with Barnett Waddingham
Everything we stand for at Barnett Waddingham is embedded in our promise – to do the right thing. We’ve applied this meaningful principle across all aspects of our business with continued success.
