Public sector employers do not offer private medical insurance – for obvious reasons. But that does not mean public sector employees do not want to buy it. If advisers can use a holistic health agenda to engage with key decision makers in areas of the public sector that have well documented challenges with managing workplace wellbeing – CEOs and HR directors included – reaching out directly or through groups like the Local Government Association, they may well be surprised at the opportunities for PMI on a voluntary or flex basis that can arise.
While largely untapped by employee benefits consultants and corporate IFAs, the potential public sector private medical market is huge. According to the Office for National Statistics, more than a sixth of workers across the UK – more than 5.4 million people – are employed in the public sector. And while austerity measures introduced in 2010 resulted in a freeze to their pay for two years and capping of wage increases to 1 per cent from 2013, last year the Government signalled a change in policy, agreeing to a 1.7 per cent annual pay rise for prison officers, an effective 2 per cent rise for police officers for the current year, with accompanying promises to remove the pay cap on NHS staff.
Teacher vacancies have risen by some 26 per cent over the past 12 months, indicating there is clear value to schools in promoting products that help keep staff healthy and at work.
A quarter of public sector jobs are within the NHS. Despite concerns regarding almost 10,000 EU health workers leaving the service since the vote to leave the European Union, NHS employment is up 2.3 per cent year on year according to the ONS. This unique perspective on the increasing challenge of meeting targets for waiting times represents a complex but nevertheless significant opportunity for those with the right product proposition and a sympathetic marketing approach. Some NHS workers will not commit to private medical insurance on principle, whilst others see the strains on the NHS at first hand and want to ensure they are covered for the worst eventualities.
For any intermediary looking to target public sector employers with health benefits it is important to understand the landscape. It’s worth noting that almost half of all public sector jobs – 45 per cent – are within education and charity services. Central government employment stands at 3.021 million, a 3.7 per cent year-on-year increase.
We can observe a clear geographical bias in the concentration of many occupational groups. Almost a tenth – 8 per cent – of public sector employees based in the South West work in the armed forces – with a high concentration of army units. More than a third – 34 per cent – of all public sector jobs in the North East sit within the NHS, making it the region with the highest concentration of NHS roles in the UK. Despite more than 23,000 jobs disappearing from Welsh councils between 2010 and 2016, it still has the highest percentage of local authority and council jobs – 26 per cent – of any UK region.
As a specialist provider to the public sector, we understand very well the impact lower pay has in reducing the demand for health insurance, a service few public sector employees can access through the workplace. However, 8.5 per cent of all NHS employees earn in excess of £50,000 a year. More specifically, 79.5 per cent of all NHS doctors earn more than £50,000 a year. That compares very favourably with the education sector where just 11.4 per cent of school teachers are above this salary threshold. The medical profession is, therefore, an attractive target for those keen on marketing to the public sector.
In the railway sector a number of significant infrastructure projects are creating new roles. A skilled industry requiring strong engineering qualities and it is perhaps unsurprising that a third of TfL employees earn in excess of £50,000 a year. However, in contrast, less than 8.5 per cent of those employed by Network Rail earn beyond that threshold.
It’s a similar story in the armed forces – 11.1 per cent of RAF employees earn more than £50,000 a year, compared to 7.7 per cent of their army counterparts.
The public sector will experience a different set of challenges as the UK negotiates its departure from the European Union, although the wider implications of public service funding in the wake of Brexit and mobility of labour are difficult to predict. This could increase the attraction of PMI if the NHS comes under additional strain due to either lack of money or the difficulty of retaining and securing enough trained staff. In the meantime, opportunities within the public sector do exist for those who can get to grips with the dynamics and demographic factors which distinguish these segments.