Report highlights cost-savings generated by mutuals and not-for-profits in the UK
Healthcare protection provided by the mutual and not-for-profit sector has provided substantial cost savings of nearly £1 billion, benefiting various stakeholders across the nation, according to actuarial consultancy OAC.
The firm reported that the healthcare provisions offered by the mutual and not-for-profit sector have resulted in savings for the National Health Service (NHS). These savings include reduced treatment costs, and rehabilitation and accelerated recuperation.
The report also highlights the positive impact on the welfare state, particularly in terms of reduced expenditures on sickness benefits and the quicker return to work facilitated by rehabilitation programs.
Employers also benefit from these policies, as they witness a reduction in sick pay expenses and other costs due to employees returning to work sooner, while policyholders receive significant benefits from being members of mutual or not-for-profit organisations.
“We have estimated that cost savings to the NHS, welfare state and employers arising from the provision of health protection policies during 2022 by the group of organisations covered in our analysis to be almost £1 billion,” Cara Spinks (pictured), head of insurance consulting at OAC, said. “This demonstrates the very valuable, and sometimes overlooked contribution to public health services made by this sector.”
The OAC report – entitled “Mutuality: Supporting Health and Wellbeing in the UK” – draws data from annual reports, accounts, solvency, and financial condition reports, as well as surveys conducted by the Association of Financial Mutuals.
The report also considers the impact of Insurance Premium Tax (IPT) on these figures. OAC estimates that those with health cash plans and private medical insurance policies, as covered in the analysis, paid an additional £98 million in 2022 due to IPT.
Eliminating IPT, OAC said, could make these policies more affordable and attractive to both individuals and employers. A 20% increase in policy uptake could potentially add a further £65 million per year to the overall benefits, even after accounting for the lost IPT revenues to the welfare state.
“With pressure on public health services like never before, this report provides a timely update on the valuable contribution to public health finances given by the mutual and not-for-profit sector,” Spinks added.
“Through the provision of health protection policies to employers and individuals, these long-standing organisations boast a strong heritage of protecting workers from the impact of ill-health, unemployment, or old age.
“These many small mutual organisations continue to operate effectively in the healthcare and protection sectors today. They do this by complementing the NHS and welfare state to actively support employers in helping their employees to remain healthy.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
