The cash plan market is becoming increasingly competitive, bringing renewed focus on how these plans fit with wider health and protection benefits, particularly given demands for better management information (MI).
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This was one of the key areas of discussion at a recent Corporate Adviser roundtable event, held at the revamped Battersea Power Station. Panellists attending the event said they wanted to see a more joined-up approach for employers, to minimise the likelihood of paying for similar benefits twice.
Lucy Pearce, commercial director at Brown & Brown, sees cash plans as a ‘go-to first’ benefit. “Cash plans are the gateway to the other insurances. It is where you want employees to go first, before using their PMI.
“If it’s communicated well everybody knows it’s there and that it’s got all of the everyday healthcare benefits.” As she points out these plans also offer a range of preventative benefits, which include valuable support for mental health. “If they are using the plan for things like this initially, and other areas where you’re preventing issues, it is potentially reducing spend.”
For Anders Lewis, employee benefits consulting leader, Gallagher, cash plans represent a positive way for employers to engage with the health of the workforce. “Everyone should go to the dentist. Most people wear glasses or at least should have their eyes tested. So that’s why I think every client should have one, be it funded or voluntary,” he said.
Aon principal consultant, Joe Broadest, added: “What is key is that it works well with multiple products. It works in parallel or it dovetails.”
David Bourne, market development leader at Mercer, said cash plans have resonance for the whole workforce. However, he said he sees some points of tension where PMI might be offered to part of the workforce, with a lower cost cash plan offered to the rest. He said this could mean both cohorts are potentially missing out. “The ones who are in the PMI plan that aren’t getting the cash plan, could benefit as well. You might start a journey with PMI, but then it is deemed as chronic, so you have got to fund your own physio, for example.”
Duplication concern
Duplication does pose a challenge amid the zeal of some providers to keep adding more services.
Bourne said: “Every provider has looked at their product and made the decision that more is more. But for our client, we’ve got duplication.”
Broadest added: “If you add in something else, is it going to appeal to the whole demographic or a very specific demographic? Because that’s another area where the industry has been guilty of doing one thing to fix one problem, and then not thinking about the other outcomes of that.”
Pearce agreed. “There’s a lot of wasted spend on duplicated benefits that we can’t avoid. Then it becomes a decision you’re making about where you are channelling that employer’s employees. We find that with virtual GPs, with employee assistance programmes, and mental health services. It is difficult for advisers to deliver that message about which is the right one to use.
“The link between private medical insurance and group risk is not as integrated as it could be, even with some providers who have both. It could make lives so much easier. On the risk side, one of the biggest issues is that our claims aren’t actually registered early enough on the income protection side, and that’s huge. If PMI was talking more to income protection, that wouldn’t be so much of an issue, because we would be aware of a claim.”
Allyson Gayle, director, employee benefits, health & wellbeing at Isio, said: “I feel like it’s everyday health, operating proactively, which leads to productivity and value in the workforce. So cash plans definitely have their place. There is a space for evolution and to work more cohesively with private medical insurance, which is probably seen as a more expensive product and is out of reach for certain cohorts and businesses.”
A preventative role
Advisers see a significant role for cash plans when it comes to prevention and helping keep workforces in good health. Rebecca Rann, head of health at Benifex, said: “With cash plans, one of the positive things is that it does cover that whole journey, from preventative health screenings all the way through to money to go to the dentist or to pay for a consultancy appointment.”
Broadest added: “Cash plans cover that front door and that diagnostic need, keeping people working, happy and resilient because you take the worry away. Then there’s a pathway to the next stage. If they have private medical as well, or even the NHS. You’re helping the employer and the employee in multiple ways, in pretty much every situation.”
Gayle added: “The worry individuals have is ‘what is wrong with me?’ How do I get this checked out? How do I go for testing? That’s such a key component, if you can give that to your employees at a lower cost with easy accessibility.”
Mark Till, CEO Unum UK, said: “If you need an operation, half the time is diagnosis and half the time is waiting to have the operation. If you can get the diagnosis part done, then you get peace of mind. If you get your diagnosis and you realise that actually it’s a very routine thing, then suddenly all that pressure’s come
off.”
Lewis added: “Certainly with the PMI side, excess is increasing as well. Being able to not have that as a hurdle to seeking any kind of treatment, where you can go straight to the cash plan, is great.”
What does great service look like?
When it comes to delivering good service, advisers want a combination of retail grade apps and human back up. Pearce said: “Having a digital front entrance and the ability to get in quickly and use the service is a key feature that needs to be in the cash plan today. Otherwise, you just see low engagement.”
Till added: “If you can combine the ability to get to stuff quickly, which is what digital typically helps you with, but with the human who can provide the emotional support and a bit of intelligence, that’s an interesting combination for getting you faster through the rehab journey.”
Pearce said: “That’s the balance the market is trying to find, but we need the ability to be able to say, I want to speak to somebody before I get frustrated.”
Rann added: “The other thing with digital first is people also want to talk to someone because when it comes to their health, they don’t know what they don’t know.”
Gayle said: “Choice is key. Different people do different things. Not everybody is sat at a desk with access to laptops and apps. Firms might have truck drivers for example. You’ve just got to make sure there’s flexibility and choice.”
Broadest added that any associated apps needed to be ‘retail grade’. “You say you’re going to pay a claim in 48 hours. It’s done in 48 hours, if not sooner, that’s what the retail journey should be like for an employee, and for us not to hear any noises that it wasn’t paid.”
Rann said that employees increasingly see the value of these products. This she said is reflected in the fact that there are a growing numbers of workers who are opting to buy these cash plans on a voluntary basis.
Kevin O’Neill, associate and consulting lead, Barnett Waddingham added: “We are seeing more companies opting for flex benefits, which brings its own complexities, especially when people join, and we know some of those who join are going to rinse it, and then the next year costs can go through the roof.”
Return on investment
Panellists agreed that different employers wanted different things in terms of management information.
Till said: “We tried to consider what the argument is for an employer to pay for this? And we went to 500 employees and said, if you had a health plan that did X, Y and Z, how many days would you have had off sick? And the answer was on average, four. So if it costs £70, if an employer spent £70 a year to guarantee four more days in the office for each of their employees, it’s the best investment they’ve ever made in their own business, isn’t it?”
O’Neill added that clients are “asking us more and more for MI, not just across health and PMI but risk”. He suggested that what Unum are setting out to do is streets ahead of anyone else in the market. Lewis added: “The ROI on any health benefits is difficult, and that spans health and protection as well. How spending X will save you Y. But we want to show a cash plan is super simple and probably one of the only benefits where you can see, well, if I pay £70 a year per employee, if it’s communicated effectively, everyone should be able to get double that at least. Not that the insurers would want to hear that.”
Bourne said: “For me, it’s about the MI that you can generate for the employer around what are the health concerns of your organisation and how can we address them. Because otherwise the answers are everyone is claiming optical and dental. Well, okay, but we have to do that anyway. We have to give eye tests. It’s about what’s different? That is the point.”
Broadest added: “It’s the analytics of the ‘so what?’ What the next couple of years could look like. That’s really powerful to an employer. It’s not necessarily about how it’s delivered to them. It’s the level of detail in it. And then somebody can tell them what’s next and how they can mitigate that. That’s where we’ve got to with private medical and some of the other insurances.”
Bourne added: “It’s about having that consistency of the message, the MI is telling you. Because if you go to the PMI scheme, GIP and cash plan, all the MI is going to be presented differently, which is great for the adviser because we can help you interpret it. But if it is one organisation, one provider, it should be consistent.”
Pearce added: “The cash plan market itself is starting to provide a little bit more information. We’ve seen some changes from other providers with reporting that is going in the right direction. With Unum coming in and doing what they’re doing, it’s going to shake it up. That’s going to be good for us as advisers, because that’s what we’ve been asking for a long time.”
Gayle said: “We’re seeing a lot of clients asking us to think about what their competitors do, and how they can compete more effectively.” Lewis said: “That’s exactly why the market is thinking we need to up our game. It will be interesting to measure how much this impacts long-term absentees and income protection, if they had a cash plan and if they ddin’t. If your return to work is 75 per cent, does it move it a week or two?” Till added: “Small movements can make big differences and that can translate into lower premiums.”
Cash plans will continue to play an important part in the benefits mix, delivering ROI for employers and tangible benefits for employees. The key issue for advisers is how to help clients build a comprehensive employee benefit package that maximises the range of benefits on offer, while reducing duplication.
