Understanding Premium Increases – And What You Can Do About Them

If you’re the group administrator of a private medical insurance (PMI) policy, managing the scheme can sometimes feel overwhelming—particularly when premiums rise at renewal. While increases can be frustrating, understanding the reasons behind them can help you take a more informed and proactive approach.

This article explores the key reasons why premiums typically increase and outlines three practical steps that businesses, families, and individuals can take to manage or respond to these changes.

What Contributes to Premium Increases at Renewal?

Premium changes are typically influenced by a few key factors:

• Age Increases: As the workforce ages, insurers typically expect a higher frequency of claims, which can increase the cost of cover.

• Medical Inflation: Advances in medical technology, rising healthcare costs, and higher consultant fees all contribute to increasing treatment costs, which are often reflected in premiums.

• Claims History: If your scheme has experienced a high volume or value of claims, this may lead to an increased renewal premium—particularly under experience-rated pricing models (common in group schemes) or no-claims discount (NCD) models (common in personal schemes).

  
  

Although insurers don’t publicly share the exact formulas they use to calculate renewal premiums, some will provide a breakdown of the increase. This might include separate percentages for age-related changes, medical inflation, and claims experience. An experienced broker can help interpret this information and explain what it means for your policy, as well as explore any alternative options.

Three Common Ways to Respond to Premium Increases

If your premiums have increased at renewal, there may be ways to reduce them. Below are three options you can explore, or a broker can help you explore on your behalf.

Exploring Alternative Providers

One approach is to assess the market to see if other insurers can offer similar coverage at a lower premium while maintaining your current underwriting terms. This is crucial to ensure that no new exclusions are applied to anyone’s certificates of insurance when you switch providers.

With a clear understanding of your situation, brokers can help identify insurers who, where possible, are willing to accept your existing underwriting terms. They can then source similar quotes from these insurers, which may help control costs without sacrificing key elements of your policy. However, the process can be complicated if you're not familiar with how medical underwriting works or with the different insurers available. If you are unsure, consider speaking with a regulated broker who specialises in private medical insurance for expert advice.

2. Discussing Discount Options with Your Existing Insurer

Sometimes, insurers may be open to negotiating the renewal premium. Brokers can facilitate these conversations and may present supporting information—like a competitive market review—to strengthen the case.

Discounts aren’t guaranteed, and the availability of any discount will usually depend on the scheme’s claims experience and wider market conditions. However, brokers often have a clearer sense of what may be achievable based on past discussions with insurers and similar cases.

3. Reviewing Policy Benefits

Another way to manage premium increases is to look at the structure of the policy itself. This might include adjusting benefits to better reflect the needs of the business, removing features that aren’t being used, or switching to more cost-effective plan designs. Even small changes—such as altering the hospital list or increasing the excess levels—can sometimes lead to meaningful premium reductions.

There may be several ways to adjust your benefits, depending on the insurer you are with. Examples include the hospital list, hospital choice, excess type, excess level, the 6-week option, outpatient cover, and removing additional add-ons. Each insurer typically offers a different suite of benefits and varying levels of flexibility. Therefore, it is advisable to speak with your insurer about your specific situation.

Summary

1. When premiums increase, there are typically three core options to consider for managing the cost:

   
   

   1. Reviewing the market to find alternative insurers, while ensuring your underwriting terms are maintained (if this is your preferred option).

      
      

   2. Opening a conversation with your current insurer about possible discounts.

      
      

   3. Looking at benefits and cover levels to better align with your needs.

Some brokers have the expertise to support businesses through these steps—helping them interpret insurer premium breakdowns, explore alternative solutions, and navigate the renewal process. The goal isn't just to reduce costs, but to ensure the policy continues to meet the needs of both the business and its employees at each renewal.

Disclaimers:

Disclaimer 1: The information provided in this article is accurate as of April 13, 2025. However, all details are subject to change in the future based on updates to insurer terms, market conditions, or regulatory changes. For the most up-to-date information, please contact a broker or your insurer directly.

Disclaimer 2: The information provided in this article is intended for educational purposes only and should not be used as specific advice for any individual insurer or policy. For details regarding your specific policy, always refer to your insurer’s policy documents or contact a broker or your insurer directly for personalised assistance.