TL;DR
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr understands that navigating the UK private medical insurance market can be a minefield for small businesses. This guide offers expert advice on selecting and bargaining for group cover that delivers genuine value for both your company and your team. Employer advice for selecting and bargaining for top value PMI group cover In today's competitive job market, offering a robust benefits package is no longer a luxury—it's a necessity.
Key takeaways
- Pre-existing Conditions: Any illness or injury you had symptoms of, or received advice or treatment for, before your policy started.
- Chronic Conditions: Illnesses that are long-lasting and cannot be cured, only managed. Examples include diabetes, asthma, and high blood pressure. While the initial diagnosis of a chronic condition might be covered, the long-term management will typically revert to the NHS.
- Underwriting: This is how an insurer assesses the risk of insuring your team. For small groups, there are two main types:
- Full Medical Underwriting (FMU): Each employee completes a detailed health questionnaire. The insurer uses this information to decide what to cover, often adding specific exclusions for pre-existing conditions. It can lead to lower initial premiums but involves more admin.
- Moratorium Underwriting: This is the most common type for small groups. No medical questionnaire is required upfront. Instead, the insurer will generally exclude treatment for any condition that existed in the few years (usually five) before the policy start date. These exclusions may be lifted if the employee remains symptom and treatment-free for a continuous period (usually two years) after joining.
As an FCA-authorised broker that has helped arrange over 900,000 policies, WeCovr understands that navigating the UK private medical insurance market can be a minefield for small businesses. This guide offers expert advice on selecting and bargaining for group cover that delivers genuine value for both your company and your team.
Employer advice for selecting and bargaining for top value PMI group cover
In today's competitive job market, offering a robust benefits package is no longer a luxury—it's a necessity. With NHS waiting lists remaining a significant concern, private medical insurance (PMI) has become one of the most sought-after employee perks. For a small firm, it signals a deep commitment to staff wellbeing, helping you attract and retain the very best talent.
But how can a small to medium-sized enterprise (SME) with a limited budget secure a policy that is both affordable and comprehensive? The key lies in understanding the market, knowing what levers to pull, and leveraging expert guidance. This article will walk you through the process step-by-step.
Understanding Group PMI: The Basics for Small Businesses
Before you can negotiate, you need to understand the product. Group private medical insurance is a single policy that covers a group of people, typically the employees of a company. It's usually cheaper and often offers more generous terms than individual policies.
One of the most critical things to understand is what PMI is for.
A Crucial Distinction: Acute vs. Chronic Conditions
UK private medical insurance is designed to cover acute conditions. An acute condition is a disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery. Think of things like joint replacements, cataract surgery, or hernia repairs.
Standard PMI policies do not cover pre-existing or chronic conditions.
- Pre-existing Conditions: Any illness or injury you had symptoms of, or received advice or treatment for, before your policy started.
- Chronic Conditions: Illnesses that are long-lasting and cannot be cured, only managed. Examples include diabetes, asthma, and high blood pressure. While the initial diagnosis of a chronic condition might be covered, the long-term management will typically revert to the NHS.
Understanding this distinction is vital for managing your employees' expectations.
Key Terms You'll Encounter
The world of insurance is full of jargon. Here are the main terms you need to know for group PMI:
- Underwriting: This is how an insurer assesses the risk of insuring your team. For small groups, there are two main types:
- Full Medical Underwriting (FMU): Each employee completes a detailed health questionnaire. The insurer uses this information to decide what to cover, often adding specific exclusions for pre-existing conditions. It can lead to lower initial premiums but involves more admin.
- Moratorium Underwriting: This is the most common type for small groups. No medical questionnaire is required upfront. Instead, the insurer will generally exclude treatment for any condition that existed in the few years (usually five) before the policy start date. These exclusions may be lifted if the employee remains symptom and treatment-free for a continuous period (usually two years) after joining.
- Medical History Disregarded (MHD): Typically available only to larger groups (often 20+ employees), this is the most comprehensive type of underwriting. It ignores everyone's pre-existing conditions, offering cover for eligible acute flare-ups. While attractive, it is the most expensive option and rarely available to very small firms.
- Group Leaver: An employee who leaves your group scheme has the option to continue their cover on an individual policy without any new medical underwriting. This is a valuable benefit for staff continuity of care.
Why Offer PMI? The Tangible Benefits for Your Small Firm
Investing in your team's health is a direct investment in your business's productivity and resilience. The business case for PMI is compelling, especially in the current climate.
According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost because of sickness or injury in 2022, the highest level in over a decade. Meanwhile, NHS England data shows the waiting list for routine treatments stands at around 7.5 million.
PMI directly addresses these challenges.
| Benefit for the Employer | Benefit for the Employee |
|---|---|
| Reduced Sickness Absence: Staff get diagnosed and treated faster, returning to work sooner. | Fast-Track Medical Care: Bypass long NHS waiting lists for consultations, diagnostics, and treatment. |
| Improved Talent Attraction & Retention: A top-tier benefit that makes you a more attractive employer. | Peace of Mind: Knowing they have access to private care reduces health-related anxiety. |
| Enhanced Productivity & Morale: A healthy, supported workforce is a happy and productive one. | Choice and Convenience: Choice of specialist, hospital, and appointment times that fit around their life. |
| Demonstrates a Caring Culture: Shows you value your employees as people, not just workers. | Access to Advanced Treatments: Some policies cover drugs or treatments not yet available on the NHS. |
By helping an employee get a knee operation in six weeks instead of 18 months, you not only help them get back on their feet but you also get a valuable team member back to full capacity far quicker.
Step 1: Laying the Groundwork – Defining Your Needs and Budget
Before you approach insurers or a broker, you need to do some internal homework. A clear plan will make the entire process smoother and ensure you get the right cover.
- Decide Who to Cover: Will the policy be for senior management only, or for all employees? Offering it to everyone is more inclusive, but a tiered system can help manage costs. You can also decide whether you'll allow employees to add their partners or children at their own expense.
- Set a Realistic Budget: Determine how much you can afford to spend per employee, per month. A budget of £30-£60 per person is a realistic starting point for a good quality small group scheme, but this can vary widely. Be clear on whether the company will pay the full premium or ask for an employee contribution.
- Define Your Priorities: What is most important to your team?
- Fast access to diagnostics and consultations?
- Comprehensive cancer care?
- Mental health support?
- Physiotherapy and complementary therapies?
Having a "must-have" vs. "nice-to-have" list will be invaluable during negotiations. An expert PMI broker, such as WeCovr, can help you analyse these needs and benchmark them against market offerings at no cost.
Step 2: Understanding the Levers of Negotiation – What Affects Your Premium?
The price of your group PMI policy isn't fixed. It's determined by a range of factors, many of which you can adjust to meet your budget. Understanding these "levers" is the secret to effective negotiation.
| Cost Factor | How It Affects Your Premium | How to Negotiate It |
|---|---|---|
| Level of Cover | Comprehensive plans (e.g., full outpatient, mental health) cost more than basic plans (e.g., inpatient only). | Start with a basic plan and add only the specific options your team values most. |
| Excess Level | This is the amount an employee pays towards their claim. A higher excess (£250, £500, £1000) significantly lowers the premium. | Introducing a mandatory excess of £100 or £250 is one of the easiest ways to cut costs. |
| Hospital List | Insurers have tiered hospital lists. A list that includes prime central London hospitals is far more expensive. | Unless your staff are based in central London, choose a national hospital list that excludes the most expensive facilities. |
| 6-Week Wait Option | This popular option means the policy will only pay for inpatient treatment if the NHS wait time is longer than six weeks. | This can reduce premiums by up to 25-30% and is a fantastic way to secure value, as the policy still provides a safety net. |
| Outpatient Cover | Cover for consultations and diagnostics that don't require a hospital bed. This is a major cost driver. | You can limit outpatient cover to a set monetary value (e.g., £500 or £1,000 per year) instead of paying for full cover. |
| Demographics | The average age, location, and industry of your workforce all impact risk and therefore price. | You can't change your team's age, but providing accurate data to a broker helps them find the insurer who best favours your demographic. |
Working with a broker allows you to model different combinations of these levers to find the sweet spot between comprehensive cover and an affordable premium.
Step 3: The Art of the Bargain – Practical Negotiation Tactics for SMEs
Armed with your budget, priorities, and an understanding of the cost levers, you're ready to secure the best deal.
1. Don't Go It Alone: The Power of an Expert Broker
This is the single most effective tactic for any small business. Trying to negotiate directly with giant insurers is an uneven fight. You don't have the market knowledge, data, or relationships.
An independent, FCA-authorised broker like WeCovr levels the playing field. Here’s why:
- Market Access: We have access to the whole market, including deals and products not available to the public.
- Bargaining Power: We place a high volume of business with insurers, giving us leverage to negotiate better rates and terms on your behalf.
- Expertise: We do this every day. We know which insurers favour which industries and demographics, and we know how to structure a policy to maximise value.
- It's Free: Our service is paid for by the insurer through commission. You get our expert advice, negotiation, and administrative support at no cost to your business.
2. Be Flexible with Your Cover Options
Rigidity is the enemy of a good deal. Show insurers you're willing to be flexible. For example, instead of demanding full, unlimited outpatient cover, ask your broker to price options with a £1,000 limit. Instead of a zero excess, see how much you could save with a £250 excess. Small compromises can lead to significant savings.
3. Introduce Wellness and Prevention
Insurers favour proactive companies. Highlighting any existing wellness initiatives you run—or plan to run—can help your case. Modern PMI is increasingly focused on prevention.
Many policies now come bundled with fantastic value-added benefits at no extra cost, such as:
- 24/7 Virtual GP: Instant access to a doctor via phone or video call.
- Mental Health Support: Access to counselling sessions or digital cognitive behavioural therapy (CBT).
- Gym Discounts and Health Incentives: Programmes that reward healthy living.
- Health and Wellness Apps: Tools for managing diet, fitness, and wellbeing.
As a WeCovr client, your team also gets complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app, helping them build healthy habits.
4. Review Your Policy Annually
Never let your policy auto-renew without a market review. Insurers often offer a competitive rate in year one, only for the premium to jump significantly in year two. This is known as "premium creep."
A good broker will proactively manage your renewal. Months before your policy is due to end, they will:
- Review your claims experience.
- Re-assess your business needs.
- Take your revised details back to the entire market to see if your current insurer is still the best value.
This process keeps insurers honest and ensures you're always on the most competitive plan for your needs.
Adding Further Value to Your Employee Benefits
A comprehensive benefits package extends beyond health. When you work with a full-service broker, you can often find savings by bundling different types of cover. For instance, at WeCovr, clients who take out private medical insurance or life insurance can often secure discounts on other policies, such as income protection or critical illness cover. This allows you to build a holistic and cost-effective benefits programme that truly looks after your staff.
Putting It All Together: A Real-Life Example
Let's imagine a small graphic design agency in Manchester with 12 employees, average age 34. Their initial quote for a comprehensive PMI plan comes in at £75 per person, per month (£10,800 per year). This is over their budget. (illustrative estimate)
Working with their broker, they decide to:
- Illustrative estimate: Introduce a £250 excess. (Saving: ~15%)
- Add a 6-week wait option. (Saving: ~25%)
- Switch from a 'Premium' hospital list to a 'National' list, as no employees need regular access to central London hospitals. (Saving: ~10%)
The revised premium drops to around £42 per person, per month (£6,048 per year). They have saved nearly 45% on their initial quote while still retaining excellent core cover for cancer care, diagnostics, and surgery. They have successfully negotiated a top-value policy that fits their budget.
Does group PMI cover pre-existing conditions?
Is private medical insurance a taxable benefit for employees?
What is the minimum number of employees for a group PMI scheme?
How does using a broker like WeCovr affect the cost?
Ready to explore how private medical insurance can benefit your small firm? Get a free, no-obligation quote from our team of specialists today and discover the value of expert advice.
Sources
- Office for National Statistics (ONS): Mortality, earnings, and household statistics.
- Financial Conduct Authority (FCA): Insurance and consumer protection guidance.
- Association of British Insurers (ABI): Life insurance and protection market publications.
- HMRC: Tax treatment guidance for relevant protection and benefits products.
