The current growth in the corporate PMI market may be reversed as a result of cost pressures, accord...
The current growth in the corporate PMI market may be reversed as a result of cost pressures, according to a recent survey by consultant group Towers Perrin.
Employers are becoming more concerned over the escalating cost of providing PMI cover to employees, with the effect that these costs are preventing companies setting up new schemes or from expanding existing ones.
The survey of 110 major UK employers, 70% of which employ 1,000 staff or more, shows that over half felt that they were unable to control these rising premiums.
A mixture of medical inflation, increasing claims, insurance premium tax and employers now paying NI contributions on those employees covered, has meant that the cost of PMI as a benefit has risen dramatically.
Around 39% of the respondents experienced a per capita increase of over 10% in the last year, with over a third of these seeing an increase of more than 20%.
Also highlighted by the survey were the two most important reasons companies offer PMI to their staff. These were the importance of PMI as part of a competitive package to recruit staff and also as it enables employees to receive timely and appropriate treatment so that they spend less time off sick.
However, the report concluded that in order to keep the costs of running their plans to a minimum, employers must review the cover they offer. The report said: "Companies should analyse and review their health plans to ensure they are co-ordinated with their human resource strategies and broader business objectives. It is feasible to design plans that both meet employees' needs and address employers' concerns about increasing claims and spiralling costs."
But Carolyn Derrington, head of business development at Norwich Union, said: "I agree with some of the findings, but it does seem a bit negative. Company PMI is the one market that is steadily growing and I have yet to see any signs of change. It will be interesting to see what happens in the figures for 2000. I do not believe it will be different."
