SMEs face higher premiums for medical insurance

Small businesses are facing higher premiums for providing their staff with private medical insurance in 2011, research finds.

According to data released by HR consultant Mercer of 136 companies, premiums for small and medium-sized enterprises (SMEs) have increased by 10 per cent since 2010.

By contrast, large companies in the UK and Ireland are experiencing PMI increases of 4.9 per cent.

SMEs are now paying average annual PMI premiums per member of £1,532, up from £1,499 in 2010. Per employees, annual premiums have increased by an average of £78.

The increase in PMI premiums for SMEs is driven partly by insurers looking to regain margins that were eroded in the recession, when premiums were dropped in order to retain business, according to Mercer.

However, the firm adds that SMEs can mitigate these increases by putting pressure on their adviser to get them the best deal.

Donna Biggs, principal at Mercer says, ‘We push our financial advisers for the best deals in our personal life but SME owners seem to largely forget these lessons when assessing PMI for their staff.

‘Companies should look at their broker and challenge them to see if they are capturing the best deals on the market.’

As SMEs often provide key members of staff with PMI cover, premiums are subject to substantial increases if an employee’s health changes. One firm of solicitors providing PMI cover for three senior members of staff saw the cost of providing cover increase nearly 40 per cent per person from £1,852 to £2,578, Mercer reveals.

Biggs concludes, ‘While NHS reform is on hold, the long term trend is towards increasing expense of private plans, so managing this cost is essential. PMI is highly valued by employers and a useful tool in attracting and retaining staff.’

See also: What kind of insurance does your small business require?

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