More than 3.5 million UK employees now have private health insurance, according to research from consultancy Towers Perrin.
The survey of FTSE350 companies found that 55% of companies now provide private corporate health coverage to all employees. In 2000 the figure was just 10%. And 94% of FTSE350 companies provide health insurance to at least one employee group.
This rapid growth in corporate health insurance coverage has come despite the above-inflation rise in corporate premiums. According to the survey, the average rise in health insurance cost since the last survey in 2002 was 5.4% per annum and it now costs, on average, £427 per employee.
Of those companies that now provide health insurance as a standard employee benefit, 81% say they do so to “keep the benefit package competitive”. The next most cited reasons are “to get staff back to work quickly” (63%) and “reduce sickness/absence cost” (49%).
“The survey shows that companies are increasingly providing health insurance because of a competitive market for recruitment and retention, as well as a desire to minimise the financial impact of employee illness and absence,” said Steve Haynes, consultant in Towers Perrin HR Services’ group health and risk practice.
Despite the fact that 31% of respondents say they believe absence has a “significant” or “very significant” impact on profitability, only 42% are able to estimate the cost of sick pay at 3.4% of payroll.
Companies are even less comfortable with estimating the full cost of sickness absence, including overtime, replacement staff, management time and loss of business and goodwill through inability to deliver goods or services, on top of sick pay itself.
Of these indirect costs, just 8% are willing to venture a figure, most estimating the additional cost at between half and equal to the direct cost of sick pay.