Private medical insurance (PMI) costs for small and medium-sized businesses have risen by 10% over the last year – twice as much as the increase for larger firms.
That is according to a new study from consultancy firm Mercer, based on PMI data from 136 British companies.
The report also shows that, for smaller firms, the price of PMI per employee has increased by £78 over the past 12 months.
On average, small and medium-sized businesses are paying an annual PMI premium per member of £1,532 up from £1,499 in 2010.
According to the research, the increase in premiums for small firms is being driven by a number of factors, including the increases set by insurers now looking to regain margins that were eroded in the recession, when prices were dropped in order to retain business.
The rising costs of healthcare, concern over the impact of NHS reform and an ageing workforce were also found to be adding to the upward pressure on the cost of PMI.
Donna Biggs, principal at Mercer, said: “We push our financial advisers for the best deals in our personal life, but (small to medium-sized business) 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."
However businesses should continue to invest in PMI, advises Mercer, as a useful means of attracting and holding onto top talent.
Biggs added: "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."