With the economy showing little sign of an upturn and spare money thin on the ground, cost-effective cash plans are the most sought-after employee benefit. Nicola Culley examines this rapidly growing market and ponders its longevity
The persistently low economy means business is booming for cost-effective cash plans. But when the market lifts, what will become of them? Will they be thrown aside in favour of more holistic packages as employers become a little less obsessed with price? Or perhaps innovation will take them one step beyond and keep the product area bright.
Corporate-paid cash plans have enjoyed considerable year-on-year growth in the past few years. According to independent research, the product area is the most sought-after employee benefit.
A study, conducted by global research consultancy TNS on behalf of PMI Health Group, showed 35% of full-time staff said cash plans were in their top-three benefits. Of those, cash plans were ranked as most valued by 11%.
The report showed staff earning less than reported average salary of £26,200 selected cash plans as a top-three benefit ahead of PMI.
Most have attributed the growth to a mass re-evaluation of company offerings when the markets plummeted; cash plans being an extremely viable option for businesses attempting to construct competitive yet cheaper benefits packages.
A queue of providers have revised their offerings of late - Perfect Health, Simplyhealth, Engage Mutual, Health Shield to name a handful - perhaps to build on the rising demand.
Health Shield's recently launched package specifically caters for the SME space, looking at three or four employees. It launched in September last year and the comapny has no plans to innovate further in the near future.
Lara Rendell, marketing manager at Health Shield, said: "We are identifying markets that we can provide more cover in. There is not that much out there that really caters for SMEs specifically because the claims risk is higher and it is all about balancing that. With cash plans it is all about identifying the gap in the market and making suitable products to provide cover.
"Auto-enrolment has probably driven more to look at their benefits packages and, for me, it was about looking at an area of the market we could do more in."
Rendell said it was probably all providers that wanted to do more in the small business space as opposed to it being a unique move for Health Shield.
"Balancing the increase claims risk can be challenging. It means price can be higher and it is important to balance this out with more benefits to add value," she added.
According to Rendell, dental benefits were always popular and were becoming more and more attractive among consumers alongside all the NHS pull-backs. But Health Shield does not offer dental.
Instead it ensures it offers dental benefits from other providers through its flex platforms. Rendell said of not providing dental benefits directly: "It is not our area of expertise."
