I have a corporate client self-insuring his staff's PMI. Is this wise on his part?
There are several risks associated with self-insuring PMI. While some savings may appear possible, on a like-for-like comparison it is unlikely your client will get as good a deal over time as they would with a specialist insurer.
Medical inflation is difficult to predict as new therapies and treatments are discovered all the time. People do not understand the true cost of treatments as our research last year showed: 58% of people believe a heart operation would cost less than the typical £14,500 with one third stating £10,000. Around 27% chose between £5,000 and £8,500. Similar results were recorded on the cost of a soft tissue (MRI) scan with one-third picking £200 less than the actual £600 typical cost.
This demonstrates the widespread lack of understanding of medical costs, which could leave a self-insuring company with some nasty and unpredictable surprises. Also, some heart and cancer treatments can cost as much as £50,000.
PMI providers understand medical insurance is about more than medical expenses. A range of preventative healthcare and screening services are offered, as are helplines and 24-hour access to a GP in some cases. Such extras offer a more rounded healthcare plan than a non-specialist company could easily and effectively offer.
The rise in the number of people insured with specialist PMI companies on employer-paid schemes shows this benefit is growing in popularity ' among employers and employees. And for those companies that believe their own claims experience justifies better premiums, rather than being part of a 'community' assessment of risk, PMI companies offer options such as low claims frequency ratings.
Your client should make a comparison on a like-for-like basis. With all the added benefits taken into account, they will be pleasantly surprised by the range and value for money offered by company PMI.
Mike Hall
