Covid-19 is already having a significant effect on business practices in the employees benefits space.
Following government advice that businesses should switch to remote working where possible and encourage ‘social distancing’ many organisations are now allowing employees to work from home.
However it is clear that the speed at which this crisis has taken hold, has left some firms woking in this sector struggling to ensure they have adequate IT services to support widespread homeworking.
There are reports that some firms in the sector are limiting access at present while they try to address these issues.
One of the most immediate effect on those in the industry will be a dramatic drop in new business.
Employee Benefits Collective partner James Biggs says they have already seen a potential new business deal cancelled. He says the firm specifically cited financial impact of the current shut down. He says businesses large and small are aware of the potentially devastating economic impact of this will be significant, and are putting a freeze on any non-discretionary spending.
He says: “Businesses are looking at what they are spending their money on. They don’t know what the long-term impact of this will be so are looking to protect the bottom line where possible.”
This will prove a challenge for the industry, as new business is likely to dry up and scheme switching — be it of pension, group risk or PMI business — grinding toa halt.
Biggs says that speed at which this has hit the industry has taken many people by surprise.
“Just a week ago we were doing drop-ins with a firm in Blackburn, talking to staff about financial education. There was hand sanitiser and people were taking precautions but very few people seemed unduly worried about this. But in a matter of days this has completely changed.”
“We are an agile firm and already have the technology to ensure we are all geared up to work from home and deliver services via webX and webinars. Other may not be in such a good position.”
Howden Employee Benefits and Wellbeing’s head of benefits strategy Steve Herbert says the corporate pensions and employee benefits industry is better placed to weather the storm than many, for example those in leisure or retail sectors, who are seeing an immediate and in some cases total loss of revenue.
However he says there is likely to be a effect on the industry over the next few months. His says scheme switching will be a low priority fo most clients — and even if plans were underfoot to switch providers, this is likley to be put on the back burner for now.
Herbert says: “This will have an impact as new business leads grind to a standstill. In addition many consultants will have clients who are struggling, or who may go out of business.”
He says: “The help that is being offered from the government is via loans, so this will increase corporate debts. As an industry we may have to rethink how we help clients through this situation and provide and communicate key benefits to staff at a point that remains affordable.”
While the crisis is ongoing consultants will also have to rethink how they communicate with employers and employees. A number of companies have reported an increased number of queries, particularly about group risk products such as group life, and income protection.
Canada Life marketing director Paul Avis says that such cover can provide vital peace of mind for worried employees. But he says he is not anticipating a huge spike in claims. As he points out most people recover from Covid-19 within a matter of weeks, so this is unlikely to lead to any significant increase in income protection claims. The evidence from other countries is that complications and fatalities tend to be among older age group, many of whom will not be in the workplace.