Will group insurers remain as insurers or become service providers? Should advisers be consulting on additional services? Paul Avis investigates.
While all insurance offers some form of financial benefit should the worst happen, the world is getting ever more complex as the volume of added value services laid alongside core insurance products increases.
With most group health providers offering a range of services, how does an employer decide which is best - and should advisers be supporting their decision making on this aspect of the products too?
Human resource (HR) directors and compensation and benefits managers can be confused by the myriad of available services and are genuinely seeking advice in their decisions as to which providers offer the best ‘value' services.
To put this in context, in the group risk market there are as many as 28 different additional service variants offered across eight different service propositions that align with the three core financial products.
Put this alongside the employer's need to review other provisions - such as private medical and cash plan services, stress help lines offered by general insurers and other 24/7 health help lines - and it could be argued that, with such a diversity of offerings, advisers should be looking to consult on these, as well as the actual insurance product.
Not least because there is a significant variance in insurer propositions and the in-house or contracted third-party services aligned with the insurance cover provided.
However, advisers are brilliantly placed to work with employers to establish their needs and help them evaluate the worth of the propositions offered. Then, of course, to liaise with the employer and the insurer to set up employee communications programmes, so the value is maximised.
So, is there a paradigm shift in what financial insurance products are really about, are intermediaries riding this tide of employer interest?
Added value
Employers will not have to make group risk claims against their policies every day. So, the ability to gain value in other ways during the policy year should not be underestimated.
Even if an organisation has had no claims, the daily use by employees of added value services will give the insurance product a higher perceived staff benefit value and raise awareness.
This in turn should make the insurance renewal an easier decision, particularly when there are cost drivers to limit or remove benefits when the worth is not recognised or easily evidenced.
A further consideration is the increase in flexible benefits popularity where employees make choices about which benefits to have. With an increasing number of options available to them, anything that health insurance providers can do to provide immediate, rather than at-claim support, is worth promoting.
With voluntary, affinity and non-traditional benefits programmes, possibly on the back of automatic enrolment, set to increase, the non-core benefits that can be used daily will be an increasingly important dimension to customer as well as consumer choice.
It is fair to say that employees appreciate the services offered by insurers when they know about them and, in Canada Life's experience, there is a significant increase in service usage when an effective, regular communication programme is in place.
Our Employee Assistance Programme (EAP) is offered alongside our Group IP schemes. Frustrated with what we thought was lower utilisation among scheme members than the offering deserved; in December 2010 we made it available to non-insured employees and effectively it allowed employers to actively promote it in the workplace. Since then we have seen a tenfold increase in its usage, demonstrating both provider and employer value.
