Healthy options for smaller firms

PROLIFERATION both of medical insurance plans and the intermediaries selling them has complicated life for companies offering health cover as an employee benefit.

Noble Lowndes, better known for pensions advice and a relative newcomer to the health field, says small companies in particular have been poorly served and are prey to brokers seeking commissions. It says it has identified 156 plans for companies with fewer than 20 insured employees.

It believes its corporate healthcare service, launched this year, will help small companies to get better service and a faster response from their medical insurers. As the UK's largest employee-benefits consultancy, Noble Lowndes hopes it can exercise some influence with insurance companies.

Businesses have increasingly approached Noble Lowndes for advice on health insurance plans. In response, it has amassed a wealth of data.

'It ensures we can monitor premiums and insurance cover across the whole marketplace. Direct computer links are also being established with some of the larger suppliers to speed up the process,' said John Cassell, the UK healthcare director.

Noble Lowndes earns commission from medical insurers for its services and in rare cases, where no commission or an inadequate one is paid, it charges the client consultancy fees. It allows clients to see the level of commission.

The company is under no obligation to do so. Medical insurance is not an investment so it is not regulated by the Financial Services Act. There is no vetting of intermediaries and no legislation forcing disclosure of commission. But Noble Lowndes believes that some form of regulation for the industry is desirable.

Despite rises in the costs of medical insurance of 10 per cent to 15 per cent a year, more small companies are offering it as an employee benefit.

Noble Lowndes advises that healthcare cover should not be viewed in isolation. Companies should look at the balance of benefits in employees' compensation packages, it says.