The Private Medical Insurance minefield

Going directly to a Private Medical Insurance provider may not save you money and often a broker can obtain better rates due to their market influence, as well as implementing the most suitable product.

Very few clients are aware of the whole market and instead opt for the household names rather than a specialist or most price competitive.

The Private Medical Insurance (PMI) minefield

This is a simple case of moving a client from directly dealing with an insurer to allowing Generation Employee Benefits to act as an intermediary.

In addition to pension, which our audit found to be a good and well run scheme, the company also had a private medical scheme for its 120 employees.

The scheme was with a major household name insurer and had been in place for four years. Over the period the premium had risen by over 10% per annum – well above PMI inflation.

The client was clearly aware that the cost was spiralling and the insurers explanation was that this was claims related.

PMI policies are a complex product with many variables of cover that can affect cost, such as the level of outpatient payments, annual deductible, hospital banding etc.  If clients don’t understand the ratio of levels of benefit to cost and don’t manage claims access, costs can soon spiral out of control, effecting the overall affordability for the company and increasing the employees tax liability.

The initial Generation Employee Benefits audit identified that savings could be made by negotiating reduced premiums, by obtaining alternative providers quotes and driving down cost. The level of deductible was too low and the outpatient cover too generous for the clients budget. By adjusting these levels, premiums were reduced further.

The main saving was due to commission terms within the contract. With many insurers they will pay commission to companies like Generation Employee Benefits, but if a client goes direct the premium doesn’t reduce. Therefore, by taking over the servicing and receiving commission we were able to service all employee benefits from the PMI commission, at the same time as saving pension servicing fees of £3,200 p.a. charged by another broker.

Outcome

The client was able to continue with the benefit, with just a few changes to the structure of the scheme and of course significant cost savings.

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