Company health insurance premium costs are set by insurers based on their assessment of the number and cost of claims that they anticipate paying over the next contract period. Insurers use statistical data such as the age profile of the insured population, geographical locations and the historical claims experience of group schemes to attempt to predict the claims that they are likely to pay if they insure a group scheme. By far the most important element in this prediction process is the historical claims experience information of a group scheme which provides quantitative data on the amounts that current and previous insurers have paid to claimants. Equally important for future claims prediction purposes are qualitative data such as current medical conditions, future claimants’ prognoses and past claimants’ causes of death.
Most companies with private medical insurance, life insurance or income protection insurance schemes obtain quotations from the current insurer and alternative insurers when these group schemes approach the contract renewal date. Insurers assess the risk and provide quotations for the forthcoming contract period.
This process is used year after year by almost all companies providing health insurance benefits to employees. Premiums have followed an upward trajectory for many years and increasingly employers are questioning how long they can continue to afford to provide health insurance schemes for their employees. Most companies have passively accepted this situation for a long time, mainly because they do not know of any alternative. Insurers have been very happy that corporate clients have accepted double digit premium rate increases for a long time so arguably they have little incentive to develop effective cost control strategies.
So, what is the answer?
Reducing risk reduces future health insurance premiums.
Employers have two main choices – continue to tolerate spiralling insurance premiums or reduce the future health risk of their employees and thereby control future premium costs.
We can work with you to introduce a wellbeing programme for your employees which will reduce health risks. Based on sound medical science, it will help your employees understand their personal health risks and take action to lead healthier, longer and happier lives. Due to the reduction in health risks for many employees, claims on health insurance schemes are lower in frequency and average cost. Consequently, future insurance premiums on these schemes are likely to be lower than they would have been had the wellbeing programme not been implemented.
Such programmes not only control health insurance premiums. They also provide a return on investment of typically between £5 to £10 for every £1 spent due to reduced sickness absence, improved work performance, lower accident rates and greater staff retention.
An initial consultation and assessment of how we can help your company is available without cost or commitment.
Contact us for more information.