In a push to increase take up, group income protection schemes are commonly being bundled with additional healthcare cover, but Debbie Lovewell questions whether the extras really add value
Employers have historically focused on cost when buying group income protection as there has been little differentiation between providers' various product offerings. As a consequence, the market has been relatively stagnant. However, providers keen to win new business from rivals are now offering extra services to help employers prevent staff from going on long-term sick leave or rehabilitate those who are back into the workplace.
Colin Micklewright, head of group income protection business development at Canada Life, says: "We've seen more innovation and product development in the last 18 months-to-two years than in the previous 15 years."
Some providers offer these additional services within the price of the standard group income protection cover, while others offer them at an extra cost. Jamie Winter, head of UK healthcare and risk consulting at Watson Wyatt, explains: "Group income protection has not sold well across the UK market over the years and everyone wonders why. [Insurers have made] the assumption that something has to be added to make it more [tempting] for an employer to buy. Therefore, insurers have come to the conclusion that if they add services into the standard group income protection offering then they will get two gains from that. One, they will sell more group income protection and, two, they will then stand a better chance of retaining that customer because of the added services."
Most of these additional services are aimed at enhancing healthcare provision. Some insurers include diagnostic tools, services that enable staff to access treatment or to return to work more quickly, often using independent specialists. Norwich Union Healthcare, for example, includes services such as symptom assessments and a health planner within its group income protection product for schemes with more than 25 members. Nick Homer, senior propositions development manager, explains: "[Services like these] can give early insight if you're not aware of issues within the workforce. Within the corporate environment, we need to be focusing on a holistic [approach]. It's quite a cost to the business and group income protection tends to pick claims up quite late in the day."
Norwich Union Healthcare's group income protection offering also includes access to a 24-hour GP helpline, information about hospital waiting lists and stress counselling, as well as access to a stress helpline as standard.
Other insurers now include basic employee assistance programmes (EAPs) as a standard feature of group income protection schemes. Depending on the provider, however, this may incur an additional charge.
Included within the cost of Canada Life's offering is the Best Doctors service, which enables claimants to seek a second medical opinion and treatment from specialists worldwide. Micklewright says this was initially intended to differentiate the organisation from competitors. "We hope people look beyond just the cost. If you look for treatment early, it takes away some of the longevity of claims." He adds this may eventually result in lower group income protection premiums.
Employers that wish to add even more to their income protection scheme could consider purchasing one of the range of additional products that are available from some insurers for a fee. These include options such as discounted gym membership, absence management reporting tools, EAPs and online health assessments or questionnaires.
Not everyone, however, believes these additional extras actually add value to group income protection schemes. Watson Wyatt's Winter, for example, says that the options packaged together with group income protection schemes are not always a good fit and are of little real value to employers.
Many employers are also unlikely to make their decision about which income protection product to opt for on the basis of the extra services that are included. "The income protection offering is really first and foremost about cost, then it's about free cover, then it's about terms and conditions. That still is the case and what I would suggest to the insurance market is rather than spending more on add-on services that don't fit very well, maybe they should concentrate on trying to do something to the income protection contract that makes it more valuable to employers," says Winter.
However, he believes insurers' move to enhance their products is a step in the right direction. "I think it's good providers are looking for ways to do something a bit different that would add value, but I think they are missing the target at the moment."†
If you read nothing else read this...
- Many group income protection providers now offer additional products and services beside core income protection.
