50% rise in UK employee insurance costs if working age hikes: Survey

UK companies are facing big cost increases in their employee insurance premiums as the average age of their employees continues to rise. Research from Towers Watson shows that when a company’s average employee age rises by five years its Group Income Protection insurance premium could increase by as much as 50 percent.

The company also found a similar link between workforce age and insurance cost for Group Life Assurance cover and Private Medical Insurance. Towers Watson suggests that a change in the average employee age from 35 to 40 could result in a 40 percent increase in premium costs for Group Life Assurance, with the cost continuing to increase as the organisation’s average age rises. A 40 to 45 average age rise could result in a 50 percent premium increase and a 60 percent increase if the average age rises from 45 to 50.

Philip Percival, head of Towers Watson’s FiT Age programme, said: “Understanding the financial situation of a workforce is very important for companies wanting to gauge if and when older employees are likely to retire. While many organisations are benefiting from the experience and knowledge associated with older workers, they may not have a clear picture of the overall financial situation of their employees, leading to impaired workforce planning. However, by informing and educating workers early on about how to achieve the retirement income they want, companies can help reduce their own costs and liabilities.”