The workplace protection and healthcare sector has sought to boost value for clients and members in recent years, via a whole range of added-value support services.
But consultants at a recent Corporate Adviser roundtable event said while these were initially well-received, they were concerned that the proliferation of services was now creating confusion for clients and ‘support service fatigue’, with many employers effectively paying for services they don’t use.
Many consultants at the roundtable event, held at the House of Lords to discuss Corporate Adviser’s latest Workplace Protection and Wellbeing report, wanted more flexible products, allowing clients to ‘turn off’ redundant services.
Gallagher lead consultant, risk and healthcare Anders Lewis said larger corporate clients could easily have six employee assistance programmes (EAPs), three of four virtual GP options, plus a range of discount portals for members if they have PMI, a cash plan product plus a range of group risk products. “Ultimately you just have to pick which one to promote and ignore the rest,” he said.
“Our job as consultants is to help clients understand which are the most suitable products to promote to employees,” said PIB Employee Benefits head of healthcare risk and technology Clare Dare. “But I think the challenge is that there are too many options. You can be explaining the various support services on all these products and we have clients basically asking us to stop, or saying ‘not another one’.”
Adding value?
Benefex head of group risk Chris Read agreed that there was “definitely an element of support services fatigue” setting in. “Some customers would definitely benefit from a stripped down version of many of these products, particularly as cost is an issue for employers at present. There would definitely be an appetite for lower-cost options without all the bells and whistles, because most clients are getting these bells and whistles elsewhere.”
As he pointed out, while these support services were often marketed as a ‘free’ add on, there was obviously a cost to the insurer in offering these services, which is rolled into the premiums charged to all clients. “Clients would prefer more choice when it comes to selecting the support services they need. And use the money saved to invest in the services they do want. Focusing on a narrower range of key support services should mean they are promoted better to members.”
As he pointed out, while the cost difference may be marginal, for larger corporate clients, shaving 2 per cent off could result in worthwhile savings.
MEC managing director Ian Holmes agrees a more modular approach would make sense for a lot of clients. He added that services like virtual GPs and EAPs are hardly a differentiator now, when it comes to selecting and recommending services for clients, as they have rapidly become ubiquitous on most protection policies.
“I don’t really see it as innovation from many insurers. They are just adding services because another insurer offers this. I’d rather they spent the money instead sorting out their administration and service. That would be an innovation we’d welcome as consultants.”
Holmes says this isn’t to detract from the value of these offerings, particularly EAPs and virtual GPs. But he added in many cases clients would be better buying these as stand-alone products rather than bundled into insurance plans. “
The cost of these products is relatively low, at about £5 a head. But if it is being paid for it tends to be more valued, so clients will promote these services far better. There is also a service issue here too. Insurers may not be paying huge sums to the third parties that are providing these support services, and this can impact staffing and service levels — for example are there sufficient people on EAP helplines to answer calls promptly?” Holmes said he felt standalone options typically offer higher service levels, with the option to switch if these fell.
However, while many of the advisers attending the event would like a more flexible approach to added-value wellbeing services, there was acknowledgement that the current approach was delivering for some clients. “
If clients were given the option to strip out these benefits, the reality is that most would not have opted for EAPs,” said Verlinugue UK head of employee benefits Mark Pugh. Members benefitted from access to these helplines enormously during the pandemic he said, with many offering access to mental health counselling, bereavement support and legal advice.“
A more modular approach might lead to most clients stripping these products back to the bare bones, which would result in less of a value proposition,” he added.
Succession Employee Benefit Solutions employee benefit consultant Tim Parker agreed that a range of support services on these products made them far more attractive to the SME market. “It gives the employer the opportunity to say to their employees look what we have secured for you. Wellbeing services and access to a virtual GP are very popular and generally really well received.”
From a provider’s points of view Canada Life sales manager Rus Waygood added that inclusion of these services was now a ‘hygiene factor’ with some consultants following a tick-box approach and not considering products unless these included these features.
PMI growth
Looking across individual product areas within the sector the consultants attending the event said concurred with the report’s findings that there had been strong growth in the PMI market in the past year. Data from the majority of PMI providers showed that this market — in terms of the number of employees covered — grew by 10.9 per cent in 2022, more than twice that of the group risk or cash plan market.
Consultants said that they had seen particularly strong growth among SMEs. Dare said take up among these smaller businesses has been surprising. “The market is certainly growing here, with many of these businesses now putting in this benefit for the first time.” Dare says this growth is largely due to the perceived difficulty of getting treatment quickly on the NHS.
However, Parker pointed out that in many of these cases this cover is only available to key individuals, partly as a retention tool, but also to ensure prompt treatment for illness or injuries if needed, reducing potential absence from the business.
Given this growth among SMEs, many of the consultants expressed frustration that there was not a standardised way of reporting claims in this market. Consultants said this is problematic, as without this information SMEs have little indication of future premium increases.
Lewis says: “There are not 25 insurers in the industry now so it seems staggering there isn’t some standard way of reporting claims in the SME PMI market. There needs to be more openness and transparency on this issue, with providers coming to some agreement to provide this information to consultants and clients.”
Holmes agrees this is a significant problem, adding some providers say this isn’t possible due to data protection. But he pointed out that other insurers do offer this information, so this does not seem to be an issue with regulations.
Given transparency is an issue regarding claims, advisers said they were disappointed Bupa had not provided market data this year for the Protection and Wellbeing report. “It is obviously their prerogative not to supply this information,” said Holmes. “However it does give the impression that either they’ve not had a very good year or they don’t actually know their own figures.” Other advisers were also critical of Bupa’s current service standards, although many expressed frustration with poor performance across the industry when it came to dealing with claims or processing renewals.
One area of discussion was whether PMI policies would continue to include cancer claims as standard in future. Advisers pointed out that medical inflation was already running at a high rate, and likely to push up premiums significantly in future. This could be exacerbated by an increase in expensive cancer claims — partly caused by delays to diagnosis during the pandemic, and problems getting treatment via the NHS.
Advisers agreed that stripping out this cover might make these PMI policies less attractive. “But how can PMI premiums remain sustainable when larger cancer claims become an everyday occurrence to deal with?” asked Holmes.
Waygood said rising cancer claims weren’t just an issue for PMI providers but were affecting claims across the protection market. He provided some sobering figures on increased incidence of this disease. “We’re seeing cancer claims increase across group life, group income protection and group critical illness. Historically, people might think cancer was primarily a disease affecting older people, but we are seeing rising incidents among the younger working-age population. According to latest statistics around 950,000 people of working age are living with cancer now. This figure is expected to rise to 1.5m by 2030.”
He added this in his view the number of cases may be further increased by health changes brought on by the pandemic. “We are seeing a lot more people leading more sedentary lives, partly due to the fact they are working from home. And we are certainly seeing people getting heavier with average BMIs rising. This is likely to contribute to a range of poor health outcomes.”
Cash plans
Elsewhere, some advisers at the event expressed surprise that the figures for the sales of cash plans were not more buoyant. According to the report the cash plan market, again in terms of employees covered, grew by 1.5 per cent in 2022.
However Beckett Financial Services employee benefit director Tracey Gloyne said these products were “flying off the shelves at the moment”. She said the range of benefits offered, and the fact plans offered moneyback on regular dental and optical bills meant they were an excellent product when it comes to engagement.
Holmes concurred, stating that he had recently had a corporate client put in place cash plans for all 2,000 employees, which included partners. Many said they expected the upward trend recorded last year to accelerate in 2023. Advisers were also enthused about innovation in this market, which includes developments like the SkinVision app, which monitors moles for potential signs of skin cancer.
Pugh added that when compared to the SME PMI market, the management information available to clients was significantly better on cash plans. However while there was support for this product, Lewis pointed out that there was also a risk of steep premium rises here too in the next few years. “
If the benefits on cash plans are communicated effectively to members then it is going to hammer providers’ claims experience and there’s going to be big premium increases ahead.” As he pointed out this seems to be one of those products where the benefits outweigh the premium charged. “Many are priced at around the £50 per employee mark. But even if a member goes to the dentist once, gets a new pair of glasses and perhaps sees a consultant then they could be claiming back almost £400. In some ways it doesn’t make sense — the bang for your buck is brilliant — but of course traditionally it has been priced like this because many members never claim these benefits.”
Group income protection
Looking at group risk market, consultants discussed whether there was scope for further innovation here, particularly in relation to group income protection. Waygood pointed out that while various support services had been added, the core insurance benefit had not changed significantly since the 1970s, with the exception of limited pay options.
However in recent years there had been a significant shift in working practices, and a different a pattern of claims, with 26 per cent of GIP claims now for mental health he said.
Advisers and consultants thought these policies were generally meeting the needs of clients and their employees. Dare spoke about the early intervention strategies as being particularly effective, and said these strengthen the “tripartite arrangement” between client, consultant and provider which can help deliver best outcomes.
Read added: “I think GIP is massively undervalued in the market and don’t think customers always understand it. But I think it is very effective, and able to deliver real benefits for clients. It is one of our favourite products and has been for years.”
Group life insurance
The announcement in the recent Budget to remove the lifetime allowance on pensions could have some ramifications for the group life insurance market, where there has been a move in recent years to offer excepted group life schemes, which avoid the 55 per cent tax if payouts exceed the pensions LTA of £1,073,100.
However while advisers welcomed this Budget change, they said it wouldn’t lead to significant changes in the group life sector at present. Contradictory statements put out by the government have muddied the water over the future treatment of life insurance claims and consultants said most providers will be leaving scheme structures as they are until changes have been confirmed in law. Lewis added the situation was further complicated by the fact that Labour have said they will reimpose the lifetime allowance if they form the next government. “
The last thing brokers or clients want to do is to spend a lot of time unravelling something and then overnight have to reinstate it again if this issue becomes a problem again.”
Looking across the different product lines that make up the wider protection and healthcare market, consultants and providers attending the event remain confident that challenges in the NHS, recruitment problems and an increased focus on health and wellbeing would continue to drive interest in protection and healthcare benefit. But despite this, advisers remained concerned that rising claims could cause premiums to rise significantly, potentially putting a brake on the growth seen in recent years in these markets.