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Mercer warns that PMI shift could follow pension path

Private medical insurance could face a shift echoing the move from defined-benefit to defined-contribution pensions, warns Mercer.

A report by the consult-ancy firm, published this week, shows that the price of medical cover for staff has increased by 67 per cent since 1999.

The proportion of claims over £10,000 has increased by 11 per cent over the same period while medical inflation is currently running at 10 per cent.

Health and benefits business principal Steve Clements says: “If the current rate of inflation continues, we may see medical plans undergoing the same process exper-ienced by pension schemes in the move from defined-benefit to defined-contribution arrangements.”

Clements says companies are increasing employee contribution levels through premium sharing or at the point of claim or both.

At last week’s Protection Review, Norwich Union Healthcare head of clinical governance Dr Doug Wright said: “We are going to see some of the smaller cor-porates think long and hard about whether they want to keep health insurance as a benefit.”

Church Hill Finance principal Anthony Badaloo says: “Wherever they can cut costs a company will and more responsibility will go back to the individual.”

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