British employers have expanded the use of company health schemes as the country's National Health Service struggles to meet patient demand in the aftermath of the COVID-19 pandemic.

A record 4.4 million people are now covered by health insurance through their employer, according to the Association of British Insurers, as waiting lists for hospital treatment in England hit record highs in September. A target for treatment within 18 weeks has not been met since 2016.

"Where in the past, PMI (private medical insurance) used to be considered a back-up, it is now becoming the primary point of access into the healthcare system," said Luke James, a senior consultant at Mercer Marsh Benefits.

Major UK health insurer AXA said earlier this month it expected "headwinds" from higher numbers of health claims in Britain. AXA declined to comment further.

Aviva declined to comment and Bupa did not respond to request for comment.

British individual and workplace health insurers paid out a record of nearly three billion pounds ($3.74 billion) for claims in 2022, an ABI spokesperson said.

Employers are enthusiastic about offering health cover, as delayed treatment can lead to sickness and productivity losses, industry advisers say.

Premiums - which typically take inflation into account - for individual and workplace policies combined rose by less than 2% between 2019 and 2022, a spokesperson for the ABI said.

But with costs of medical staff and services rising faster than general inflation, higher take-up of online doctors and more expensive care including new cancer treatments, premiums are rising, the advisers say.

Some workplace health insurance schemes are posting rate rises of more than 40%, James said.

"The market is nervous, we are in a very unknown phase and insurers don't like unknowns," said Rachel Western, a principal at consultants Aon.

"It's a difficult risk to predict."

Tim Cowan, senior partner at insurance broker Anderson Health, is among those seeing increased post-pandemic demand for private mental health services, including costly psychiatric hospital care.

In addition, the enduring popularity of remote work may lead to more claims for back problems, said Juan Serey, private medical insurance advisor at broker Secure Mortgages and Protection.

For 2024, Mercer Marsh Benefits forecasts the medical trend rate in Britain at 11%, versus 3% for general inflation. This rate reflects medical inflation together with changes in treatment, usage and regulation.

But insurers are experiencing even higher inflation, some consultants say.

Employers are starting to question how they can tackle the rising insurance costs, said Brett Hill, head of health and protection at consultants Broadstone.

This could lead to employees paying a flat fee such as 100 or 250 pounds for initial consultations with a private online doctor, or companies offering health screening to identify medical issues before they get worse, he added.

($1 = 0.8025 pounds)

(Reporting by Carolyn Cohn, editing by Sinead Cruise, Alexandra Hudson)

By Carolyn Cohn