Private medical insurers should look at ‘pooling’ their flex risk to benefit SMEs

The company suggests that the healthcare element of flex is one of the main stumbling blocks but it believes that a ‘Flex Small Scheme Arrangement’ could be championed within the industry which would enable flex schemes to become the norm rather than the exception.

Julia Turney, head of benefits management, Jelf Employee Benefits said: “We’re finding that smaller employers are becoming more sophisticated with regards to managing their employee benefits and are looking at ways to make their budgets go further. This often leads to conversations about flexible benefits and how these can be better aligned to corporate objectives.

“Currently, it can be quite difficult for advisers to provide and implement innovative and lasting flexible benefit strategies for smaller clients but if just a handful of insurers were to provide or underwrite PMI schemes for small numbers of employees designed specifically for flex, they would quickly see a first-mover advantage. Small businesses want to offer flex schemes and corporate advisers can see a real business case – we just need providers to devise a product structure to help us.”

The employee benefits consultancy believes that insurers take a much less accommodating approach to designing private medical insurance for smaller flex schemes because of concerns over variable membership and claims volatility, hence the call for pooling the risks.

Julia Turney concluded: “There does need to be some innovation moving forward on the part of insurers, otherwise a whole swathe of the employed population is being ignored. SMEs make up an extraordinarily large proportion of the UK’s workforce and the insurers who see small businesses as a potential rather than a threat, could open up a whole new channel of revenue.”