Many successful companies want to offer their employees extra benefits but smaller organisations are understandably frustrated by the cost of group private health schemes. This is because one serious claim can have a major financial impact on every member and place additional pressure on the employer.
Some private health insurers will offset potential losses from a group scheme by penalising all members, leading to a huge increase in annual premium that results from say just one cancer claim or heart operation. The greater the claim, the greater the penalty for the group and it is unethical to move a seriously ill employee out of a scheme to reduce the premium. The company is either stuck with a costly health package, or they are forced to opt-out altogether– both options negating the positive benefits of offering the scheme to employees in the first place.
Why do so many private health insurance company schemes operate in this way? The simple answer is they are shareholder driven and need to demonstrate profitability.
As a broker we have been reluctant to recommend these schemes to our business clients but we have found a solution for companies. We have looked for not for profit health providers that don’t penalise for claims and this helps to keep premiums at a sustainable level over the long-term.
Castleacre were recently able to help a client whose group company health premium had increased at renewal by a staggering 53% as a result of one employee receiving treatment. We transferred this company scheme to a not for profit organisation who don’t penalise clients for individual claims and the company received a 28% saving in premium.
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