Private medial insurance intermediaries can save companies a small fortune if they sell policies on a fee rather than a commission basis, says Leeds-based intermediary Gee & Co.

It points out that, since April, companies have become liable to pay employers' National Insurance contributions on any insurance benefits they provide to staff.

Previously, employer NI had been calculated on salary alone.

Insurance benefits such as private medical insurance are now added to the salary to calculate the increased National Insurance contributions.

Gee claims this will increase the cost of PMI to companies by around 13%, but can be cut if the intermediary charges on a fee rather than a commission basis.

General manager of Gee Jennifer Storrow said: “If you charge commission on private medical insurance, part of it is being paid by the employer and part of it by the employee.

“But if you change to a fee basis, then the employer will be paying the fee in place of the commission and there will be no National Insurance.

“Take an example of a company scheme with 20 members, where the annual premium is £20,000 per annum inclusive of Insurance Premium Tax.

“A reduction in the premium by a 10% commission element would reduce the premium payable by the company to £18,000.

“Not only would they have saved on the 10% commission, but also on the IPT (5%) on that commission element.”