What does group risk benefits provision of the future look like?

Group risk benefits of the future need to support ageing workforces with diverse health needs, so innovation is key. But what product and service development is required by insurers to ensure that provision is fit for purpose?

Group risk benefits can be traced back to the 19th century when the Original Holloway Friendly Society offered an income replacement policy now known as group income protection (Gip).

Product ranges may have evolved since then, but not enough to cater for employees’ increasingly complex health and wellbeing needs, according to Tom Gaynor, UK employee benefits director at MetLife.

“Insurers need to genuinely look to provide the choice and the innovation that we have been hideously bad at as an industry for years,” he says. “We have not really innovated at all. We’ve tinkered around the edges with cover limits and added a few bells and whistles, but we have not really communicated what a group risk benefit does for an employee at the end of a claim.”

For example, insurers have introduced a range of Gip cover limits to enable employers to select the length of time for which they will provide income replacement for employees suffering from injury or long-term illness to help manage their costs. 

Gaynor believes that the group risk industry has been too focused on highlighting employees’ lack of group risk protection rather than addressing their evolving needs. “The protection gap is no longer just about debts, mortgages and cover if employees are ill, it is about protection gaps created by elderly parents and children,” he adds.

Group risk benefits of the future therefore need to reflect the UK’s ageing society, which is placing increased responsibility on employees to care for their elderly parents as well as their children. They must also reflect the health complaints that come with older age, as more employees opt to remain in work past their 60s.

But David Schupak, European sales director for Maxis Global Benefits Network, believes that employers rather than insurers will drive innovation. “Providers should be identifying gaps in the market, but employers that want something that is going to help them differentiate their organisation are doing this, and they want insurers to deliver it,” he says. ”The first insurer that finds that magic bullet will then be an industry leader and develop their market share.”

Group risk provision must be affordable 

But this magic bullet needs to be affordable, because HR and benefits professionals remain under immense pressure from their finance directors to provide a return on investment for their benefits procurement. Gaynor says: “Benefits need to clearly demonstrate a value, not only from a HR perspective of looking after staff and doing what is right by people, but also from a finance director’s point of view of looking for a return on investment.”

David Manning, a principal at Mercer Marsh Benefits, believes that individuals within organisations who buy employee benefits can be divided into two categories: the first primarily sits within HR and wants to use benefits as a tool with which to engage employees, and the second is an ‘economic buyer’ who sits within procurement and is focused on driving down costs.

“I think the influence of the economic buyer is growing, so in order for there to be a debate about benefits spend employers need to be able to articulate what group risk benefits are designed to do and how they can help and support their particular business,” he says. ”I think there is significant work to do to get employers to understand what group risk benefits can do for them.”

Schupak agrees but believes that the growing dominance of procurement teams within organisations will stifle group risk benefits innovation. “The entrance of procurement means that the whole industry is becoming commoditised and it is very difficult to differentiate benefits,” he says. “I think that it is important for employers to have a very big range of different benefits, but the more that procurement is getting involved and removing this range the more that the group risk industry is going to be massively impacted. We are going to see less innovation because procurement teams want the cheapest benefits and are not really interested in integrating with HR.”

Rehabilitation data is lacking

One of the major reasons why HR and benefits professionals face a major challenge in securing buy-in from their procurement teams and finance directors is a lack of data that demonstrates the value of group risk benefits.

Ron Wheatcroft, technical manager at Swiss Re, says: “The industry does not have any credible data about rehabilitation and that’s something we do need to work on and begin to develop, so if insurers are selling to an economic buyer they have much more data that can support their case.”

He adds that the industry must not shy away from assessing the value of rehabilitation because of its woolly and nebulous nature as it is critical for boosting employers’ bottom line.

In the meantime, employers could improve their organisation’s bottom line by providing more preventative group risk services to help reduce the number of employees needing to take time off work for injury and sickness.

Chris Minett, managing director of AgeingWorks, says: “Currently, most organisations have a reactive approach and reactive offering including things like an emergency helpline and emergency eldercare, which is all good, but employees have to be at a pretty acute point of need before they trigger those benefits.”

Mercer Marsh Benefits’ Manning agrees. “The standard benefits package that is in place is about dealing with something at the point it has gone wrong. It is not about prevention, education and support,” he says. 

Banu Gajendran, occupational health, safety and wellbeing manager at Allianz UK, adds: “We are finding that employees are picking up the employee assistance programme telephone line, occupational health referrals are being made and rehabilitation plans are being fast-tracked, but at that acute point (of an employee’s injury or illness) when it should have been thought through earlier.”

She adds that desirable preventative measures should include education and training around, say, workplace physical activity and healthy eating. “It is those bits that we as an organisation are actually missing, but again it comes back to being able to show a return on investment (ROI), which is what I get asked about constantly when I put forward a benefits solution.”

Manning believes that the group risk industry has a long way to go in developing preventative services and support for employers.

But Katharine Moxham, spokesperson at industry body Group Risk Development, believes that innovation is underway. “Just look at the way that group income protection has developed over more recent years,” she says. “It is an insured product that is designed to pay a claim if an employee is unable to continue working because they are ill or disabled, but there is increasingly a raft of services that come before that point that will support staff with making healthy choices and health interventions.”

Employees need support to sustain their healthy behaviour

But insurers must work with employers to help their employees to sustain any behavioural changes they make as a result of these interventions.

MetLife’s Gaynor says that online platforms that enable staff to monitor their health and wellbeing can help to engage and motivate staff. “It’s a lot less intrusive for staff to go online and answer some questions about their health. I think that the days when there will be a nurse and a doctor doing blood pressure and weight checks at lunchtime in front of everyone have gone.”

AgeingWorks’ Minett says that the gamification of health and wellbeing benefits through the use of mobile phone apps and wrist-based monitors can also help to motivate staff. Employers could also consider linking these gadgets to a reward-based system, offering, for example, cinema or retail discounts to help further incentivise employees to maintain their efforts over time. “Then there is a pay-off for them,” he says. “It is not just about them, say, losing weight, but about perhaps qualifying for 20% off the movies or whatever the reward may be.”

He adds that employers struggling to justify the ROI of such an initiative should build a business case, which for example highlights the impact of an ageing society on their workforce and the consequences of not implementing appropriate support for staff.

AgeingWorks has created a calculator that quantifies this impact. Minett says: “We explain to employers what their employees’ ageing issues will cost them and then challenge them to work through their issues. They can then consider investing, say, 4% of that cost into programmes that can start to attack those issues.”

But the take-up of group risk benefits and the growth of the group risk market as a whole depends upon a sustained dialogue between insurers and employers about employees’ ever-changing needs. As Gaynor says: “Employers are not far from having five generations in the workplace and employees need different things and have different abilities, so insurers need to look at that.”