Private Medical Insurance (PMI)

Written By: Brett Hill | Last Updated: March 2023

Brett has over 25 years’ experience in the health and protection market, having held senior positions with both insurers and intermediaries in sales, underwriting and product/proposition development, and leads Broadstone’s growth in the health and protection market.

Brett is passionate in his belief that employee health, wellbeing and protection are interconnected, and must be at the heart of any truly engaging and effective employee benefit and risk management strategy.

Company-funded Private Medical Insurance (PMI) used to be considered a ‘perk’ for senior managers and board members, but not anymore. In the face of a worsening public health crisis, PMI schemes are an increasingly essential part of an employer’s people asset risk management strategy that helps keep their most valuable asset, their workforce, present, healthy, and productive in the workplace.

Recent data from the Office for National Statistics (ONS) shows the number of working age adults now economically inactive due to long-term sickness has increased by 25% since 2019 and is fast approaching 2.5m. (1)

Figures from the British Medical Association (BMA) show that during the same period, the NHS waiting list (England) grew by 63%, and now stands at 7.2m, the highest figure since records began. (2)

Perhaps more worrying for employers, research by the Institute for Public Policy Research (IPPR) shows the health of those actively in work is deteriorating, with 30% of working adults carrying at least one medical condition (up by 13% since 2019), and over 10% of working adults are carrying two or more medical conditions (up 20% since 2019). (3)

Sadly, there is now reason to believe the situation will improve anytime soon. With acute staff shortages across the NHS and over 130,000(4) current staff vacancies, the respected Institute for Fiscal Studies (ISFS) forecast that NHS waiting lists are likely to continue at or above their current levels for at least the next two years. (5)

Traditionally seen as an expensive benefit, innovations by insurers have made PMI more affordable, most notably through the development of directional care pathways through which insurers play an active role in guiding members to preferred consultant and clinic networks based on agreed standards of clinical practice, governance, and efficacy. These direction care plans can significantly reduce premium costs compared to traditional PMI and can be an affordable way of putting in place a new PMI scheme or extending coverage to those employees not covered by an employer’s existing scheme.

Government figures lay bare the impact of sickness absence on UK businesses. Even before the pandemic, Government data showed over 131 million working days were being lost each year to illness, with 42.5 million of these resulting from musculoskeletal and mental health conditions. (6) With NHS waiting lists having increased by 63% since then, those numbers will only be increasing.

In the face of such alarming data, employers could be forgiven for feeling powerless to manage the inevitable impact on their business, but there are concrete steps employers can take to ensure their employees can access the medical care they need, when they need it, and return to the workplace fit and productive. Recent research by Frontier Economics, commissioned by AXA Health, showed that for AXA Health customers, the fast access to medical treatment provided by PMI schemes reduced lost productivity by over £33m compared to the productivity cost of current NHS waiting times. (7)

Fast access to treatment can also significantly improve patient outcomes, especially for conditions such as cancer, where NHS performance against target treatment times has been steadily declining since 2018, with the latest data showing less than 55% of patients are being treated within the target timescale. (8) A failure to quickly treat conditions such as cancer and cardiovascular disease generally results in more complex treatment being required, which not only impacts patient outcomes, but for employers, it can result in the prolonged absence of critical employees from the workplace, driving up sickness absence costs and increasing claims costs and associated premium costs on group income protection schemes or, in the worst cases, group life insurance.

In an increasingly tight labour market, where employers are finding it ever more difficult to recruit the skills and experience needed to grow their businesses, the need to protect the health of their existing employees is greater than ever. As the UK enters a period of unprecedented and sustained pressure on its public health service, the business case for investing in company paid PMI has never been clearer.

Fortunately, innovations by insurers have made PMI more affordable, most notably through the development of directional care pathways through which insurers play an active role in guiding members to preferred consultant and clinic networks based on agreed standards of clinical practice, governance, and efficacy. These direction care plans can significantly reduce premium costs compared to traditional PMI and can be an affordable way of extending coverage to those employees not covered by an employer’s existing PMI scheme.

Broadstone are ideally placed to support businesses putting in place PMI for the first time or reviewing existing cover. If you would like to know more about how to protect your business against the dual risks posed by the worsening public health outlook and a competitive recruitment landscape, please contact us for more details on the potential benefits and cost of providing PMI coverage to your workforce.