Need to know
- Many employers take a one-size-fits-all approach to group risk benefits, but some offer employees choice through flexible or voluntary benefits schemes.
- Employers can use data sets such as claims data, absence data and occupational health data to form a health-risk profile, which can then determine which group risk benefits might be best suited to a workforce.
- Employers should evolve their group risk benefits approach as employees’ lifestyles change over time.
Group risk benefits continue to rise in popularity among employers. According to the Group watch 2016 report, published by Swiss Re in April 2016, 11.5 million people were members of group risk schemes at the end of 2015, a 3% increase in people covered from 2014. Offering group risk benefits to a workforce means employers play a key role in the protection of their employees and their families. But should employers offer their employees a more bespoke group risk provision, or is the one-size-fits-all approach best?
Matthew Lawrence, head of broking and proposition for health and risk at Aon Employee Benefits, says: “I think that a lot of employers adopt the one-size-fits all approach, particularly when it comes to group risk benefits, so it’s still quite common for employers to offer all employees the same levels of cover, or maybe differentiate between pension scheme member status or seniority status, but broadly they’ll offer all employees a benefit, particularly life assurance.”
However, many employers are moving more towards offering individualised benefits programmes to give employees choice through flexible or voluntary benefits schemes. Jo Elphick, head of protection marketing at Metlife, says: “Where voluntary benefits are on offer, the employer needs to communicate it really well. There’s a lot of opportunity for improvement in the way benefits are communicated.
“People need a lot more information to be able to understand their benefits, appreciate them and decide whether they want to take any action on them.
“So if [the employee] doesn’t understand that income protection means that if [they] are off work for more than X number of months, [their] employer has no obligation to keep paying [them], but this will make sure that [they] get an ongoing income and support in terms of rehabilitation, counselling and a lot more. Communication is absolutely key.”
Employee data sets
Drawing on different data sets can give an employer an overview of the health of its employee base, and it can then use this to determine which group risk benefits best suit its workforce.
Claims data, absence data and occupational health data can help an employer build up a health risk profile of its employee population, and then consider what risk benefits might be best utilised to help manage those risks. “That might partly be provision related, but it also might be service related,” says Lawrence. “If [an employer] has a mental health or cancer problem, and is going to insure group risk benefits, [it] needs to select a provider that can support [it] with those particular risks, if they manifest themselves through claims experience or absence data.”
Employee requirements and demographic change
A key part of determining employees’ requirements is to ascertain their awareness of the benefits and what they cover. A survey by Canada Life Group, published in June 2016, found that almost two-thirds (61%) of employees do not have any income protection if they are unable to work due to illness or injury. The survey also found that 43% of employees without income protection would apply for state benefits if they found themselves unable to work. It stands to reason that those employees without any form of protection would benefit from employer provision, or at least information about how group risk benefits could protect them.
If a workforce consists of mainly young, low-paid workers, the employer should question which group risk benefits are going to appeal to them. Would a younger workforce, with no dependants or family, engage with group life assurance or group income protection, as much as more mature employees would, for example? Martin Noone, managing director of workplace health and protection at Legal and General, says: “It’s always in the employer’s interest to bear in mind that the kind of life stage changes with individual employees as their tenure with the employer grows.
“Income protection arguably is relevant to all, but inevitably if [an employee is] single and still living with parents, and in [their] 20s, the likelihood for [them] to be on the breadline within a small number of weeks is less than if [they] were the sole income earner with two or three [children].”
It is essential, therefore, that employers evolve their benefits strategy as the demographics of their employee base changes. In an ideal world, an employer should not make assumptions about their employees’ individual needs and give them the ability to choose their own benefits, says Chris Morgan, distribution and partnerships manager at Ellipse. “Every employer is going to have a broad range of demographics within [its] organisation so the best way really is giving all employees the choice so they can choose whether to have life insurance and how much,” he says.
Informing employees about the benefits available and what the cover includes will help the perception among employees and, in turn, help the organisation take a proactive approach to health, wellbeing and employee absence. It comes down to what the employer’s business strategy is and how it uses its benefits to support and enable that strategy. Elphick says: “The old days of waiting for somebody to go off sick and pay them until they come back to work or reach retirement age have gone now.
“[Employers] are recognising that it’s more important that [they] prevent somebody from going off sick in the first place, and one of the ways that [they] can help part of that is, for example, through a group income protection scheme with added-value benefits that help the managers. But it’s not a one size fits all, it needs to be bespoke for that organisation, and that might change over time.”
Viewpoint: No employee should be without group risk protection
In the quest to offer a package that appeals to different generations and sectors of the workforce, there can be a tendency to over-focus on choice and flexibility, when there are some benefits that every member of the workforce needs. Take the case of a young unmarried person who might think there is no need to take up a flex choice for life assurance but forgets that their parents or partner might have to continue to pay their share of the rent after their death. Or the worker who still thinks ‘the state will provide’. Or the 2.5 million people currently living with cancer in the UK, according to the Macmillan Cancer Support statistics fact sheet, published in January 2015.
Death or disability has a life-changing impact on staff and their families irrespective of age, role or salary and everyone needs a way to safeguard their family’s financial stability. This is where employers can step in. Educating staff and facilitating affordable financial protection cover not only supports employees, but makes a huge difference to morale, staff retention and productivity – key business benefits – and enables an employer to position themselves as a caring organisation.
Death, illness, accident and disability are mostly completely random and can happen to anyone at any time. So, no-one should really be without group risk protection benefits; not the young, not the old, not management, not seasoned workers nor the most recent new, inexperienced recruit.
Group risk protection benefits cross all boundaries as a relevant and valued way to ensure that everyone in the company can be certain that their household finances are protected if the worst happens.
Katharine Moxham is spokesperson for Group Risk Development (Grid)