PMI remains benefit of choice, says research

Employers are continuing to offer employees private medical insurance (PMI), despite a yearly surge in premiums of up to 15%, according to employee benefits consultants Watson Wyatt.

Research has shown employers still see PMI as essential to control sickness absence costs.

John Gillman, senior consultant at Watson Wyatt, said: 'With long waiting lists within the NHS, employees who would otherwise have been off sick may receive private healthcare and return to work sooner. But there is equally a significant portion of absence cost which relates to short-term absence not influenced by PMI.'

The survey found that 90% of employers had no intention of scrapping their PMI plans.

Gillman said: 'While many companies are focused on finding ways of reducing costs, it appears that cutting back on PMI is not high on many agendas.'

Over the past year alone, the cost of PMI has risen by 12.1%, according to Watson Wyatt.

It also found the average cost of employees missing work due to sickness accounted for an average of 3.1% of the employer's payroll. This figure, however, could be much higher when additional costs are compensated for.

Gillman said: 'Hidden costs are not commonly included in an employer's calculation of absence cost. Expenses associated with hiring temporary replacements, with paying current staff overtime, of lost production and lowered workplace morale, or customer satisfaction all increase an employer's absence cost.'

But larger companies may be losing out more than their smaller counterparts, according to the survey, which showed larger employers are less likely to measure the cost of sickness absence than smaller ones, with 29% and 48% measuring sickness costs respectively.