It’s easy to pretend that the worst can’t happen, so employers can help provide cost-effective insurance products for their staff instead, writes Kimberley Dondo
Group risk was traditionally purchased by employers as a part of their staff attraction, retention and differentiation offering. However, recently more employers are using it because of a combination of the financial benefits and support services that group risk insurers offer.
The importance for these benefits are becoming clearer. The insurer Zurich found that nearly two-fifths (38%) of adults believe critical illness cover should be offered by employers as a standard benefit and a third (33%) state that income protection should be offered by employers as a standard benefit.
There are three simple products in group risk. The first is group life assurance, which provides a benefit after an employee’s death. The second is group critical illness, which pays a tax-free lump sum to an employee who is diagnosed with a defined serious medical condition or for those undergoing surgical procedures.
Finally there is group income protection, which provides continuous income when an employee is absent due to illness, disability or injury.
Of all the group risk products group income protection is the most underutilised, even though it has the advantage of returning employees to work more quickly than any other product.
Simon Thomas, director, UK Employee Benefits, Generali, says: “Considering the huge amount of wellbeing products and services that are included free of charge with group IP these days, building the business case should be pretty easy. Group IP starts from around £200 a head, while absence costs anywhere between £450- £820 per employee, depending on the industry sector.
“The wellbeing services that come with group IP can be made available to the whole workforce of the policyholder [i.e. the employer] and their dependants, not just those directly covered by group IP.
“While many companies are still struggling to put in place much-needed wellbeing interventions because of the lack of senior management buy-in – ie, the return on investment – the business case for group IP would appear to be a no-brainer: it not only covers the costs of long-term absence but it’s also an absence management tool. You don’t need to get hung up on ROI for wellbeing as it’s not costing anything.”
There also seems to be a misconception about group income protection, with some employers reluctant to talk about it, as they fear some staff will try and claim on it by taking sick days off on purpose.
Paul Avis, marketing director at Canada Life, argues employers are doing themselves a disservice. He says: “Employers have spent money on this benefit, so they should celebrate it, because insurance companies are really good at paying all valid claims and, most importantly, for the period of their validity.”
Katharine Moxham, spokeswoman for GRiD, fully supports the use of group risk products, especially in light of the Taylor review into modern working practices, which explored attitudes to mental health in the workplace. She says: “The group risk industry can and does help employers to support the mental health of their workforce and we have long recognised the positive impact of early interventions.
“We’d encourage employers using the various support services available alongside group risk core products (employer-sponsored life assurance, income protection and critical illness), many of which are aimed at helping people with mental health conditions stay in or get back to work.”
Top five tips for businesses who want to implement Group Risk:
1. Look at the quality of the product not the price
2. Structure your scheme design to fit the modern workforce
3. Design tools and support for employees about benefits available and how IP insurance fits into the package
4. Communicate the services benefits consistently and regularly
5. Work with the advisor and insurer to come up with a range of options which can be tiered, or budget based to insure a return on investment