Group risk products can support the corporate values, ESG policies and employee wellbeing strategies of employers of all sizes. But there is a big difference between the approach of large corporates to the value derived from their workplace protection and that of SMEs. To download a PDF of the round table supplement, CLICK HERE.
Speaking at a Corporate Adviser round table last month, Paul White, senior risk consultant at Howden Employee Benefits said more enlightened employers wanted to be sure their benefits reflected their core corporate values, but added that there are still lots of organisations out there that are “still living in the Stone Age in terms of employee value proposition.”
White spelled out the difference in attitude to group protection of big and small employers. He said: “There are two or three claims per thousand people for long term disability, and the same for life assurance. If you’re a 20-man scheme, you’re going to get hit by a claim on average once every few decades. This is proper insurance. This is protecting you against the unforeseen, so for them what is more visible is the value-added services rather than the insurance itself.
“At the other end of the spectrum is the large corporate. Ultimately, they pay for their claims experience. The insurance is just a financing vehicle. For them, it’s about claims management. They know their premium is a reflection of their claims costs, which doesn’t apply in the SME space, and that’s the value of the intermediary – to evidence how you control your claims best.”
ESG support
Environmental, social and governance (ESG) factors are becoming an increasingly common part of the boardroom conversation, and treatment of staff is a key element of this. Support services offered by group risk products can help employers support staff – a benefit falling under the ‘social’ element of ESG.
In recent years value-added benefits have become an increasingly important aspect of an employer’s employee value proposition. Employers want their benefits to represent what they view a business should look like and may include values such as flexibility, choice, inclusivity and sustainability, but this approach is more common amongst bigger corporates that have dedicated HR staff.
Terry Fromant, head of group risk at Premier Choice Group said: “With an SME, you’re more likely to deal with a business owner rather than a dedicated HR person.
“The truth is, good advisers don’t sell the salary replacement insurance part of group income protection anymore – they sell the value add. Whether that’s an SME client or a large corporate, you still sell that upfront care and support.
“But the cost is influenced by how long you want the insurance to go on for should that upfront care and support not be sufficient. Regardless of whether that’s an SME client or a large corporate, the person you’re speaking to will understand what they’re actually paying for if you sell the right part of the product.”
Value focus
Kevin O’Neill, consulting lead at Barnett Waddingham agreed and said that small businesses are focused on value-added benefits but the same benefit can be found on a customer’s cash plan, group protection, and PMI. This leaves them with multiple points of access to the same benefit and unfortunately, these add-ons cannot be turned off.
“For the majority of SME clients, cash is king. Paying for these benefits is the key thing so they want to get it at the best possible price. Since Covid has come along, we’re having more conversations about the value-added benefits that come along with policies.
“When I first joined the industry, you had a group life policy and income protection policy, a PMI policy. Maybe there would be an EAP attached to income protection and there might be a bit of bereavement counselling, but now the value-added benefits that are being offered by pretty much all of the insurers is bewildering.
“You can get access to a virtual GP through group life, income protection and income protection and a client could have policies that offer those. We’re having lots of conversations with them to actually unpick the value-added benefits to actually say, do you know what this one is?”
Benefit turn-off?
O’Neill outlined the way multiple added value services caused complexity for communication of benefits. “Typically the literature from each insurer will list all of the value-added benefits when actually we may not, or the client may not want to promote certain aspects of those value- added benefits. They may be an SME that does not have the money to tailor all of the engagement documentation for the staff.
I’ve had a couple of conversations with insurers about whether we can turn off the value-added benefits. And the answer is ‘No. What you see is what you get’.”
Nick Homer, head of market management at Zurich says the provider’s approach allows value-added benefits to operate independently of one another. Although having a single supplier makes it easier to present the complete product to the client, having only one source makes a company more vulnerable.
“You can try and get them all from one supplier, which clearly sometimes helps with the presentation. But on the downside the overall negotiations with that particular supplier leave you more vulnerable to operating with only one supplier, but it certainly helps on the due diligence.
“One of the advantages is that we take the best of breed approach to the suppliers and we will get the one we think meets our needs best whilst we try and present them in a coherent manner. They actually operate independently. So for us, we can (turn value-added benefits off). You can happily pick and choose ours, and you don’t need to be too concerned about not being able to access the EAP separately from the virtual GP service.”
White noted that while you can turn off added value services, you normally won’t get a reduction in price for not using them.
White added that use of off-the-shelf added value services was much more prevalent in the SME space. “A large corporate is going to have a more complex plan and more complex design access to more benefits, potentially their own in-house occupational health,” he added.
Engagement premium
When it comes to how claims experience influences the approach advisers use when dealing with large and small clients, Fromant emphasised the distinction between brokers who “sell on price” and consultants who assist the client in engaging with the product.
He said: “It’s so much more important to sell that upfront investment to get the buy-in. I’ve spoken to clients that have said ‘we’ve got this great protection, but we never see any claims’. When you start asking about their absence management, they probably had a handful of people that would have been ideal early intervention candidates.
“But because their previous intermediary hadn’t really engaged with it. That is where you really know the difference between a broker and a consultant. A broker will just sell on the price but a consultant will really help them engage with the product.”
Remote challenge
Engagement is arguably more of an issue now because of the prevalence of remote and hybrid working, with many employers experiencing a culture shift that they are still attempting to adjust to on all fronts.
Amanda Gill, senior health and risk consultant at Gallagher said: “We’re now seeing lots of employers with two different cultures. You’ve got the culture of the people in the office and the culture of people at home, and their needs are very different.
“Values will differ, so our role is to actually help the client with that engagement – making sure that the benefits and the value-added benefits that are on offer are actually promoted correctly to both sets of the workforce.”
Gender differences
Benefits should also reflect the different needs and values of people across the workforce. For example, specific added value support such as women’s health issues, particularly fertility and menopause, are becoming more prominent services.
O’Neill said: “The conversations we’re having now with clients is bringing this in, especially under structures such as healthcare trusts, where you can tailor your scheme and bring more of these benefits in. If that can come under income protection policies and is an added extra, I think that would be highly valued. Definitely with things like menopause, now that is really a discussion point.”
The debate moved further towards the topic of diversity and inclusion, which is rising up the agenda for the group risk sector.
Diversity and inclusion falls within the ‘social’ part of ESG, and is of real importance for the group risk sector said Gill. She argued that the benefits currently available might not accurately reflect the experiences of all employees, and suggested work was needed to ensure risk benefits were relevant and communicated effectively to all employees.
Gill said: “More employers want to bring D&I to the top of the agenda. I’m not entirely sure how to do it. We are having those discussions, making sure everyone has access to benefits. There is a drive to make sure that these benefits are more inclusive to everyone and more balanced.”
Culture push
Gill added: “We’re starting to have conversations with clients about their ESG agendas and what they’re looking at and again, that comes back to culture. Some are trying to meet each criterion with ESG. How can we help them play a part and do that through insurance? ESG is in its infancy within group risk, and it will be driven by other markets in the general insurance side.”