Need to know:
- Insurers have already seen an increase in life insurance claims as a result of Covid-19 and expect more claims on group income protection and group critical illness over the next few years.
- Engagement with wellbeing apps and digital healthcare has increased during the pandemic, with potential long-term benefits for health.
- Additional claims could drive an increase in premiums but adjusting benefits could enable financially stretched organisations to retain cover.
With the NHS focusing on fighting the pandemic, it’s meant delays and cancellations for diagnoses and treatment for many other conditions. This backlog, coupled with Covid-19 (Coronavirus) itself, will have some serious implications for the group risk market.
Group risk insurers have already seen an increase in claims as a result of the pandemic. Group life insurers paid £57 million across 475 claims for Covid-19 in the first six months of 2020, according to Group Risk Development's (Grid) Covid-19 Claims survey 2020, published in July 2020.
Delayed treatment
Alongside the Coronavirus claims, insurers have also seen an uptick in life insurance claims for other causes as a result of people delaying seeking medical advice or having their treatment postponed. Vanessa Sallows, claims and governance director, group protection at Legal and General, says the insurer’s death claims are around 50% higher, in line with the excess death statistics published by the Office for National Statistics.
With Coronavirus still claiming lives and NHS waiting lists growing, this trend for higher life insurance claims is set to continue through 2021. In addition, the group risk industry expects to see more claims across group income protection (GIP) and group critical illness insurance. “The nature of the conditions that are covered on these products means that it takes longer for claims to come through,” says Katharine Moxham, spokesperson for Grid. “It won’t just snap back to normal once the virus is under control: we’ll be dealing with this for some time yet.”
On GIP, the pandemic is expected to result in a significant increase in mental health and musculoskeletal claims, as Coronavirus-related anxieties and poor home working set-ups take effect. Long Covid, which can cause long-term symptoms including extreme fatigue, shortness of breath and depression, is also expected to push up claims.
Insurers have responded to long Covid by providing support specifically for the condition. For instance, Legal and General launched its long Covid intervention package in October 2020, giving employees access to a multidisciplinary programme covering both the physical and psychological aspects of the condition. Sallows says she’s already seen it benefit claims: “Some of the employees who have taken part in the programme are now on phased returns to work. It’s good to be able to provide such targeted support.”
Increased claims
Group critical illness providers are also braced for more claims. Although Coronavirus can take its toll on the body, especially the heart and lungs, with the potential to result in additional claims, insurers are much more worried about how the NHS focus on fighting Coronavirus will affect serious health conditions. “Our biggest concern is that the pause on diagnosis and treatment will lead to more cancer claims over the next few years,” says Glenn Thompson, chief distribution officer at Unum. “It’s already the biggest cause of claims on both group critical illness and group income protection.”
As well as preparing for more claims over the next few years, insurers have taken steps to support employees and employers during the pandemic. David Williams, head of group risk at Towergate Health and Protection, explains: “Insurers have really focused on the added value services they offer, with many rushing out more digital health initiatives such as virtual GP services and mental health support. A couple of years ago, employers weren’t interested in these added value services: now, they know they need to use every resource available to look after employee health and wellbeing.”
Demand for this type of support can be seen in some of the usage statistics from insurers. For example, at Unum, 2,227 consultations were booked on its Help@hand app between April and June 2020, an increase of more than 400% on the previous period. It also saw bookings for mental health appointments increase by more than 100% a month during the first lockdown.
Offering employees access to virtual GPs and physiotherapy session may help to prevent some claims, especially as these digital healthcare services can encourage individuals to seek medical advice sooner than if they had to book an appointment to see a GP. However, with more claims expected as a result of the pandemic, there are concerns about how this uptick will filter through into pricing.
“Insurers are being very cautious about pricing,” says Williams. “They are being hit with more claims but the market is really competitive. Some might put their rates up but others will see it as an opportunity to win business.”
As insurers work out their long-term pricing strategies, employers have the benefit of the two-year rate guarantee on most policies, which will help to shield them from some of the volatility.
But, even if hit with an increase, Williams cautions against cancelling cover. “Most policies allow you to change terms such as the level of cover or the length of time benefit is paid, which can reduce cost,” he says. “The pandemic has made health a priority: group risk products are a great way to look after employees’ health and wellbeing.”
Read more:
Katharine Moxham: The group risk market has risen to the challenges brought by Covid-19
Infographic: The impact of the pandemic on the group risk market
