If you read nothing else, read this …
- It is important to check out the insurance extras offered by group risk providers.
- Employers should question providers about the group risk market and what additional benefits may be available to them.
- Industry changes, such as pensions auto-enrolment, can present an opportunity to review a group risk offering.
Tip 1: Assess a product’s full features
Employers should start by assessing the full range of their prospective group risk offering. At first, a provider’s scheme may seem cost-effective and easy to implement, but organisations need to know what extra features are available in the market.
Glen Laming, employer services director at Legal and General, says an employer should always check out a provider’s extra insurance features. “Many providers offer a number of very valuable additional features as part of a group income protection scheme and it is worth employers taking time to really understand the nature of the [insurance] proposition.”
For example, stress management can help to tackle a key cause of employee sickness absence, says Laming. But an employer must know exactly what it will get from its provider to help manage stress.
“If you look at income protection providers, occupational health providers, private medical providers and employee assistance programme providers, all of those various partners will be offering a range of services in stress management,” he says.
Tip 2: Get expert advice from benefits providers
It can be difficult for employers to have expertise on group risk, so they should not hesitate to ask the experts.
Mike Perry, chief executive of PG Mutual, suggests employers should hold a fact-finding meeting with one or a number of providers to research the market and pick their brains. “An employer should gain much insight about the products and about the market by using the experts in the sector,” he says.
But Perry stresses that employers should work at a pace that suits them best.
Tip 3: Tier group risk benefit to cut costs
Employers can also work with their provider to put their group risk benefits into three tiers to save money. That this entails breaking down the workforce into different bands, which can help to keep costs down, says Perry.
“Larger employers would have a banding structure for different levels of employees and for group benefits, they could base the benefits they offer on that banding,” he says.
Perry says he has worked with smaller employers on introducing similar structures. “The bandings are really just a grade,” he says. “So a senior team [member] would be graded A and managers under them [grade] B. This would run throughout the [employer’s] structure.”
But Perry stresses that tiering should not just be based on seniority or job grade. “There are a lot people under those senior people who are indispensable to a business,” he says. “I think sometimes that is forgotten.”
Tip 4: Use auto-enrolment data
Auto-enrolment is a huge undertaking for all employers. So introducing or reviewing a group risk scheme while implementing auto-enrolment may be burdensome for some organisations.
But Andy Stephenson, national sales manager for UK employee benefits at MetLife, says that if an employer gets its data collection systems right, it could see auto-enrolment as an opportunity.
“You would hope that an employer going through any staging dates with auto-enrolment will have a system in place to capture members’ data,” he says. “As a provider of insurance, it is crucial that [MetLife] receives the relevant data so we can cost accordingly and know what we are insuring.”
Tip 5: Close gaps in coverage and liability
Employers must make sure a group risk insurance provider does not have any gaps in its coverage or liability, says Stephenson. “It is important that communication between an employer, its adviser and [insurance] provider is in place,” he adds. “Auto-enrolment is a great opportunity for employers and advisers to consult and ensure that cover is in place.”
