At a time of low unemployment, high turnover, skills shortages and largely stagnant pay, employers are challenged to make much more of what they have, particularly with regards to benefits – a huge area of spend for many.
Where they’re promoted, used and form part of a strong organisational wellbeing culture, benefits can bring much value in terms of recruitment, engagement and retention.
Success here though relies on ditching the traditional silos, not only between business departments but also across third parties: insurers and service providers.
Corporate Adviser’s Workplace Protection & Wellbeing Report took an integrated look at the propositions of all providers across the group protection, health and wellbeing space. At the round table advisers said the report is being used as a go-to provider comparison aid and in some firms as a staff training tool.
One of the standout messages that came out of this roundtable was that for all the talk, the column inches, brochures, case studies and annual facts and figures from industry bodies, concerns still remain about the quality and performance of some of the support services offered free with group income protection.
The ABI / Grid annual claims statistics go to great lengths to highlight the use of such services by employers, including some great ‘back to work’ focused case studies.
Lots of insurers are publishing data but what the market really needs is an independent view, said Broadstone director, corporate risk & wellbeing Susan Bourke.
She added that some providers are much more proactive than others when it comes to early intervention. “There’s also a lot of differences across providers with regards to claims decisions. We’ve had poor experiences where mental health is concerned specifically,” she adds.
“The promised early intervention and rehabilitation services have in some cases simply been non-existent. You only tend to get help when it gets to the claims stage.”
This negative seems to fly in the face of the way in which group income protection is sometimes positioned. To a certain extent, it’s sold on the premise that employers are too busy to manage absence: effectively offering to take this job off their hands, intervening in absences at an early stage and providing the tools to get employees happy, healthy and back to work.
Positioning the value of group income protection in this way is not useful argued MEC managing director Ian Holmes. “Why would you rely on an insurer to manage your absence? The employer should be leading on this,” he said.
The challenge is that group income protection has changed – added value services have become part of the product and access to them relies on HR acting as gatekeeper.
Barnett Waddingham workplace wellbeing consultant Laura Matthews said: “HR have enough to do and then suddenly this one part of their job [managing a salary replacement scheme] becomes very broad. They’re already suffering from information overload. And then we expect them to provide information on employee absences at an early stage. They have to consider, is this something for early intervention? Or is it occupational health?”
Legal & General distribution director – group protection Colin Fitzgerald, added that insurers need to help HR steer a course through all of this by providing clear pathways.
He agreed that it’s not necessarily the insurer’s job to manage absence but, at the same time, added: “if they’re [insurers] offering such a service then it should be made available”.
Legal & General offers a financial incentive to clients to encourage them to notify the provider about absences early so that they can appropriately triage the employee. “We’ve paid £5m over 10 years back to clients. We want to work with the employer to get the right outcome with the tools they have available to them,” he added.
Fitzgerald agreed that simply having the financial incentive in place alone is not enough to achieve take-up, adding: “You have to find a way to help HR navigate the process too. The problem at the moment is that most only focus on absences when they get to the claims stage”.
So when it comes to promoting workplace protection to employers, is a focus on the financials – or outcomes – sensible? It certainly is when speaking to the finance director, but they’re not the ones managing the scheme, said roundtable participants.
For some time, the industry has wrangled with ways to measure early intervention outcomes – ideally in pounds and pence.
Arguably, this has had limited success. Howdens Employee Benefits head of benefits strategy Steve Herbert said it is those employers that focus on workplace culture that see the value of early intervention, but not in the ‘£ gained per £ spent’ terms as some insurers tend to claim.
“A wellness programme isn’t about saving money,” added Holmes. “We shouldn’t go out with that objective. It’s not a short- term fix or a perk. The benefit structure needs to offer a much longer term focus.”
Roundtable participants largely agreed that the sharing of anecdotal employer and employee experiences probably represents the most powerful way to evidence outcomes. Unfortunately, there’s not a lot of this happening at the moment, they concurred. Nor is much happening when it comes to technological innovation either.
“The group risk industry hasn’t really embraced technology as much as health. Cash plans even less so,” said Holmes.
According to Herbert, this is symptomatic of the industry. “The industry hasn’t really changed in 30 years. We used to have general [adviser] practitioners. They weren’t necessarily doing everything well but at least they knew how and where to signpost clients. Now we have experts but they’re poor at seeing the bigger picture. Maybe technology can help with this.”
Fitzgerald said: “We need consistency of data standards across the industry. We have to externalise more. Everyone has to run payroll and pay to HMRC, for instance. So an industry standard platform must be possible for what we do too.
“The problem is that premiums are very low and too much of that premium is going into admin. It should be going into quality.”
So, does the industry need Ron Sandler-style simple products? There has to be an element of simplicity, said Fitzgerald. “The scheme design needs simplifying.
Providers have overcomplicated it. But that doesn’t stop us getting the data simplified.” Bourke highlighted the fact that the industry is still using spreadsheets. “Where companies are spread across, say five different sites, there are risks involved if you miss information. We’re still using spreadsheets. This shouldn’t be the mechanism. Insurers are looking at direct digital products now. If you can do it for smaller schemes, using Cloud-based technology, you should be able to apply this technology more broadly.”
Another reason that industry standard platforms might not have become a ‘thing’ yet could be due to the reluctance to share
data. It’s telling that three out of the main seven group PMI didn’t provide any data to Corporate Adviser’s report. Our roundtable participants put this down to various potential factors, including fear, a stagnant sector and a lack of genuine innovation.
Cash plans, meanwhile, were seen as progressive: an achievement considering some of the friendly societies are 100+ years old. Data from the Workplace Protection & Wellbeing Report shows there are around 1.5 million corporate-paid cash plans, a figure 50 per cent higher than that suggested by other sources two years ago.
“Employees can claim on them direct so a lot of value is seen,” said Holmes. “My only concern is that cost is going up. Are providers having to dip into reserves? And, if so, how long can they do this?”
Bourke said cash plans represent a cost-effective way of getting wellbeing into a business. “The marketing material is good. They can be easily included on flex portals. And they can be offered to the wider workforce. We’re seeing a more equitable approach to benefits : something for everyone at all levels.”
Delegates also highlighted that the industry needs to address the problem that flex isn’t really flexible. This will undoubtedly have a negative impact upon the potential expansion of the group protection and wellbeing market.
Matthews said: “When benefits are offered on a voluntary basis, employees face a 2-week window once a year. There’s an overload of information at that time and they don’t look at the nitty gritty of what the benefit entails. They make their ill-informed choice, the window closes and then they find their circumstances change.”
Flex might be considered another silo: yet more evidence of the need for more integration and collaboration. Corporate clients need this. Can the industry rise to the challenge?