Wellbeing support services — from virtual GPs and employee assistance programmes (EAPs), to specialist pathways for chronic conditions — have become increasingly important to employers when selecting group protection insurance.
This can be a win-win for all stakeholders, with services helping grow the GIP market while supporting employer clients by building healthier workforces and reducing claims through prevention and early intervention – helping keep premiums under control. Overall this helps advisers retain business and win new clients and ultimately ensures more employees have access to financial, physical, emotional and social wellbeing support services.
But with more providers offering more of these services the landscape is changing. Some intermediaries suggest that providers should consider unbundling these services from their core insurance propositions. Their arguments range from duplication of cover and inferior services to undue cost. But we think there’s a case to be made to defend this bundling.
One myth to address is that these services only duplicate cover and increase costs. But the cost of including wellbeing support with the insurance proposition is much lower than if the employer had purchased the services directly from a service provider. It would also be much more expensive if the insurer provided the wellbeing support services as an optional feature.
Much of the savings afforded by embedding the services comes from the fact that the cost is spread across the wide range of employers the insurer is covering.
It’s also a myth that these services are inferior when compared to standalone equivalents. The services that are part of our GIP proposition are as comprehensive as any standalone offering; from unlimitd access to a virtual GP, to unlimited in-the-moment mental health support and access to short-term counselling.
If a client purchased such service directly, they would pay significantly more. And if they wanted the specialist return-to-work support insurers provide, this would be an additional extra cost on a standalone basis. A comparative quote would need to include access to in-house vocational rehabilitation and specialist early intervention partners – from multidisciplinary cancer and neurology experts to psychiatry.
Tax-efficiency
Group protection insurances are classed as long-term insurance, so are exempt from insurance premium tax (IPT). This holds true while the total cost of providing wellbeing services is less than 10 per cent of the total premium charged. Breaching this woud mean adding IPT at 12 per cent to the cost of both the insurance and the wellbeing support. In many cases, it’s likely that the cost of providing such services on an optional basis would increase the premium by more than 10 per cent— so this is a key consideration in how insurers provide such services.
Then there’s benefit in kind (BIK) considerations. Group life and GIP are usually exempt from BIK charges. Adding additional features to the insurance package could cause a BIK liability, particularly if the cost of doing so is significant.
Insurers usually package wellbeing support services as being available at no extra cost, which means the employer is only paying for the cover to help provide protection for their employees, meaning it’s unlikely to attract a BIK liability.
Consumer duty consideration
Bundling wellbeing support services with the insurance is cost effective and tax efficient meaning we can help clients ensure the whole workforce gets access to these services, whether they are insured under the GIP arrangement.
This makes the communication of service availability and access much simpler for the employer, and helps ensures a more inclusive approach.
This bundling helps employers and employees get value from the arrangement throughout, not just if there’s a claim, and it also supports Consumer Duty / Fair Value principles.
The majority of wellbeing services are aimed at improving the health and wellbeing of employees. It’s entirely feasible that early access to support could prevent a condition worsening that otherwise leads to long-term sickness and an insurance claim — whether on a GIP policy or group private medical insurance. This is a ‘win, win, win’ situation for employees, employers and insurers.
