Why are private health insurance costs rising and what can businesses do about it?

In 2026, it can feel like the cost of running a business is increasing from every direction from energy and fuel to wages and daily operating costs, businesses are having to think carefully about where their money is going and how sustainable those costs are in the long term. For businesses that already provide private medical insurance to their employees, rising renewal premiums can raise an important question: how can we continue providing valuable healthcare benefits without the cost becoming unsustainable. There are a number of factors contributing to the rising cost of private healthcare, but there are also things businesses can do to make sure they are getting the right level of cover at a cost that works for them.

Rising claims and healthcare utilisation

One of the biggest factors that can influence the cost of a private medical insurance policy is claims and how much the policy is being used. When you have private medical insurance in place, employees are able to use the policy when they need it. This could be for consultations, diagnostics, treatments, physiotherapy or other services covered by their plan. As more people use their healthcare benefits, insurers are paying out more in claims. Over time, this can have an impact on the cost of providing the policy and can be reflected in renewal premiums. This doesn’t mean employees shouldn’t use their PMI. That’s what the benefit is there for, and employees making use of their healthcare benefits can demonstrate the value of having the policy in the first place.

However, if claims and healthcare utilisation are increasing, it becomes even more important to regularly review your policy and make sure you’re getting the right value from it. It can also be useful to look at what other options are available in the market, particularly if your renewal has increased significantly.

Medical inflation and increasing treatment costs

Just like many other areas of the economy, the cost of providing healthcare can increase over time. The cost of treatments, medical technology, equipment, medicines and specialist services can all rise. This means that if you were looking at private health insurance several years ago, you may find that a similar level of cover now costs more. Medical inflation isn’t something a business can control but understanding it can help explain why your renewal may have increased, even if you haven’t made significant changes to your policy. There are also wider changes within the private healthcare market to consider, including advances in treatment and technology and increasing demand for private healthcare. So, if your renewal has increased, it is worth understanding why it has increased and whether the price you’re being offered is still competitive.

More employees using their benefits

Employee engagement is an important part of having a successful employee benefits package. If you’re providing private medical insurance, you want your employees to know about it and use it when they need it. However, increased use of the policy can also contribute to rising claims and therefore potentially affect the cost of the plan. This is where reviewing the market can become particularly valuable. If your current insurer has increased your renewal significantly, looking at what other insurers are offering can help you understand whether your current rate is still competitive.

If another insurer can offer a comparable level of cover at a more competitive price, it may be worth considering whether a switch is right for your business. There are also other healthcare benefits that can complement PMI. For example, a health cash plan can help employees with everyday healthcare costs such as dental, optical and some physiotherapy expenses, depending on the plan. It’s not a replacement for PMI, but for some businesses it can be another way of building a wider healthcare benefits package around what employees actually need.

What can businesses actually do about rising premiums?

While businesses can’t control medical inflation or the wider cost of healthcare, there are things you can control when it comes to your private medical insurance. Regularly reviewing your policy can help you understand whether the cover still meets the needs of your employees and whether the cost remains sustainable for the business.

Things worth looking at include:

• Is the current level of cover still appropriate
• Has your workforce changed since the policy was originally set up
• Has employee eligibility changed
• Are your employees using the benefits available to them
• Are there alternative policies available
• Is your current insurer still competitive
• Could changes to the policy provide a better balance between cost and cover

You shouldn’t be looking to find the cheapest policy available. Instead, businesses should be looking for cover that provides value to employees while remaining affordable and sustainable for the business long term.

Accepting your renewal isn’t the only option

When your renewal arrives, it can be tempting to simply accept the new price and move on. But your renewal quote isn’t the only option available.

One of the benefits of working with a specialist broker is being able to look at what else is available across the market before making that decision. At Cransford, we specialise specifically in private medical insurance and healthcare benefits. Unlike brokers who offer a wide range of different types of insurance, our focus is healthcare. That means our focus is on understanding the private healthcare market, the insurers available and what different policies can offer businesses.

It also means that when you’re reviewing your renewal, we’re not just looking at whether we can find you a different policy. We’re looking at whether your current policy is still right for you, whether there are opportunities to improve the cost or cover, and whether another option would provide better value.

Market reviews

This is where a market review can help. A broker can compare your existing policy against options from multiple insurers, looking at both the cover available and the cost. This gives your business a clearer picture of what’s available before making a decision about your renewal. And a market review doesn’t mean you have to switch provider.

If your current insurer is still providing the right cover at a competitive price, you can stay with them. However, having alternative options available can also give you stronger negotiating power when discussing your renewal with your existing provider. We’ve seen this make a real difference for businesses that already have private medical insurance. Sometimes the best outcome isn’t changing insurer at all, it’s using the information from the wider market to negotiate a better position with the provider you’re already with.

At Cransford, we carry out market reviews for businesses that already have private medical insurance, as well as businesses looking to put a policy in place for the first time.

Don’t just accept your renewal. Review it.

With costing raising all the time, it is increasingly important for businesses to understand what they’re paying for and whether their private medical insurance remains sustainable. You don’t necessarily need to reduce your benefits or change provider to manage rising costs. Sometimes, the first step is simply reviewing what you already have and seeing what else is available.

If you already have private medical insurance, we can carry out a free, no-obligation market review to compare your current policy against the wider market.

You can then make an informed decision about whether to stay with your current provider, negotiate your renewal or explore alternative options.