Need to know
- Employers should make sure they are maximising all features of group risk benefits they offer.
- The benefits provided to employees must be communicated in a compelling and timely manner.
- Employers should also factor in employee sickness absence and the cost of sick pay.
Nearly 12.5 million employees were covered by group risk schemes by the end of 2017, according to the Group watch 2018 report published by Swiss Re in April 2018. The report found that there was a 3.1% increase in the number of people becoming members of group risk schemes last year, in comparison with 2016.
But how can employers measure the return on investment (ROI) on group risk benefits?
There are two key factors employers need to consider when assessing this, according to Chris Morgan, chief marketing officer at Ellipse.
“Firstly, they should make sure they are maximising all the features of the product, including additional services such as employee assistance programmes (EAPs) and vocational rehabilitation services,” he says. “Secondly, they should make sure they are communicating the benefits provided to their employees in a compelling and timely manner.”
Importance of communication
If communication is poor, employees will not fully grasp what is being provided, and employers will subsequently lose out on the goodwill generated by investing in these products, adds Morgan.
“One of the biggest benefits of group life and disability insurance for employees is peace of mind,” he says. “By their very nature, only a minority of employees will ever make a claim, but all will benefit from the financial security that the cover provides.”
Surveying employees to gauge how much they rate group risk benefits could be one way of assessing how much they value them. For flexible benefit schemes, for example, the take-up of additional employee paid cover would be another good indicator of engagement. “Combining this with industry benchmark data will help the employer to assess whether investing in these benefits is helping them attract and retain staff in an otherwise competitive employment market,” says Morgan.
While making a group risk claim is not an everyday occurence for most employees, they can still appreciate how much it could alleviate worry, says Katharine Moxham, spokesperson for industry body Group Risk Development (Grid).
“In Grid’s latest employer research (a survey of 500 HR decision makers in November 2017), employers cite several key reasons for providing group risk benefits ranging from paternalism, through helping with recruitment and retention and differentiating their package, to being able to recoup the costs in improved productivity and team morale,” she says. “So focusing on how these benefits help with engagement and productivity is probably the best measure of ROI.”
Rehabilitation support
The rehabilitation support that comes with group income protection can also yield significant ROI, not just in terms of reduced absence but in terms of treatments and support paid for by group risk providers, says Moxham. “Group Risk Development’s (Grid) Claims survey 2017, published last May, found that 2,289 people were helped back to work in 2016 with active early intervention support from a group risk insurer,” she says. “This might have been fast-tracking access to counselling or physiotherapy, or other treatment, such as workspace modifications or mediation.”
When it comes to assessing a ROI, employers should also factor in employee sickness absence and the cost of sick pay, says Glenn Thompson, customer solutions director at Unum UK.
“If group risk benefits are working properly and [employers] are fully maximising rehabilitation and early intervention services, they should see a cost reduction in these key areas,” he says. “Beyond that, metrics such as staff awareness of what’s on offer and, for flexible benefit offerings, take-up rates can help understand employee engagement and whether [employers] need to dial up benefits communication.”
Analyse data
When it comes to requesting data from providers, there are a number of areas they should be able to help employers with, says Thompson.
“Providers have access to all sorts of insights about [a] workforce, so it’s important for businesses to leverage all they have to offer,” he explains. “Ask them for data on income protection, critical illness, and sick pay insurance claims data to better understand what keeps staff away from work.”
A provider should also help employers analyse the data to spot trends in conditions, illnesses, gender or age range, according to Thompson. “From here, you can work together to make accommodations to better support staff.”
If, for example, the data showed that 20% of staff were out of work for musculoskeletal conditions, an employer could focus on equipping employees with workstations that are ergonomically optimal. “EAP data can be extremely useful,” says Thompson. “They’re a first line of defence in protecting the wellbeing of staff by providing fast, confidential solutions to all kinds of problems like mental health or money worries that could otherwise quickly escalate and impact productivity.”
It is also vital not to overlook the hidden costs of sickness absence. As Steve Bridger, managing director of group protection at Aviva, says: “The hidden costs of absence are often forgotten but are also the most difficult to capture. The loss is not always the salary costs of the absent employee but the associated costs for a replacement, additional overtime costs, impact on productivity and morale from the remaining team, especially in a small team or area that a replacement is very difficult to replicate.”