21 October 2015
Health insurance: employers should act now
Health insurance is one of the most popular employee benefits in the UK. However from 1 November 2015 policyholders will see a significant spike to their renewals as George Osborne’s increase in Insurance Premium Tax (IPT) takes effect. The rise, announced in the last budget, sees IPT go up by over 50%, from 6% to 9.5%. This will affect most policies taken out or renewed after the beginning of November.
Brett Hill, Commercial Director at The Health Insurance Group explains, “Between the IPT increase and the normal inflation of health insurance costs we are looking at increases across the market from around 10 per cent to as much as 15 per cent, before any allowance is made for a customer’s claims experience or age profile. Businesses, who want to offer this important benefit to attract, retain and achieve higher performance from staff, will have to be more careful about getting the best value available. This means shopping around not just for price but also the cover provided. In many cases, employers may be able to offset the increase in IPT costs by restructuring the package of health and wellbeing benefits they offer to their staff. Substantial savings can often be made by spreading benefit provision across a range of products and services, not all of which will be subject to the change in IPT.
“For companies considering putting cover in place for the first time, we would encourage them to act fast, as policies taken out prior to 1st November will in most cases continue to attract the current rate of IPT for a further 12 months.”
Although rates in the UK still remain lower than many of our European counterparts, this increase could cause financial challenges for businesses, particularly SMEs when they enter their renewal cycle.
Brett Hill adds, “the value of using an independent intermediary to help contain cost increases is that we can provide guidance on how to keep claims low, which is then reflected in the premium, without loss of perceived benefit to employees. We work closely with our clients to ensure that their health and wellbeing packages are delivered in the most cost effective, transparent and sustainable way possible.”