Financial services firm Towry has removed private medical insurance (PMI) and travel insurance from its flexible benefits scheme.
It removed PMI before its annual flex enrolment window this month after rising premiums made it no longer viable to offer through flex. Richard Higginson, head of reward at Towry, said the benefit was chosen mostly by staff who had a high risk of illness, which increased the number of claims, affecting the premiums for the PMI scheme.
“Generally, [people that select PMI] are at higher risk of having some sort of medical claim,” he said. “In a normal core scheme, which the whole [workforce] would be in, for every potentially ill person, there may be dozens of perfectly healthy people, so the risk is much lower and the premiums stay down.
“If PMI is selected through flex, it is self-selecting and those more likely to get ill will tend to join. The claims can be much more per head than [in] any normal core scheme and the insurer comes back at the end of the year and hikes the premium to make up for it.”
Higginson said PMI premiums had become so high that it would have been cheaper for some staff to buy cover privately on an individual basis.
Towry now plans to reintroduce PMI as a core benefit for all its 800 employees in a couple of years’ time, as part of its efforts to remain competitive after it floats on the stock market. The flotation is likely to happen by the end of the year.
Towry dropped travel insurance from its flex plan after its provider, Bupa Travel, withdrew its Leisure Plus policy because Towry has fewer than 1,000 staff.
“It was a really popular benefit,” said Higginson. “We had a really good product that was very medically orientated, so if an employee got ill overseas, it was a really useful policy to have.
“Our insurer came to us a couple of months ago and said ‘you do not have enough staff for us to carry on offering this policy’.”
Although Bupa offered the firm the Leisure policy instead, Towry felt it was less comprehensive and decided not to take it up.
Meanwhile, Towry has added breast screening and life assurance for employees’ partners to its flex scheme.
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