Risk benefit trends your business should watch

A number of unexpected factors are shaping group risk insurance in our post-pandemic world – heightened awareness of what they’re getting amongst employees, flexible benefits structures and an entirely new definition of what it means to be ‘at work.’

Join Big Business Insights podcast host Blessing Utete and Old Mutual’s Group Assurance Business Executive, Mariaan de Jongh, as they discuss these trends, how they are changing group benefits products and choices, and importantly, how it could influence your company’s employee value proposition in the future. 

 You’ll gather insights on:

• Trends in group risk benefits and what’s driving them
• Death and disability benefits in a post-Covid South Africa
• The rise of flexible structures and how employees are exercising more choice
• What employers should consider before allowing flexibility
• The value of funeral benefits many employees seem to miss, and why.

Listen now. 

Chapters

• 0:03 Introduction
• 0:56 The trends we are seeing from an employee benefits perspective
• 1:44 What do death and disability benefits look like post-Covid?
• 2:33 Is there anything new being offered from a benefits perspective?
• 2:59 What is happening with the pace at which claims are being settled?
• 3:34 What does choosing multiple versions of employee benefits look like and what are the effects?
• 5:20 What would you suggest an employee considers when they think of going flexible?
• 5:53 From an organisational perspective, how should human capital or the human resources teams manage these things?
• 7:03 Funeral Benefits: why are they such a strong value proposition? And are employees generally aware of their existence and real value?
• 8:18 What needs to happen around awareness and education?
• 9:26 Closing

Transcript

Blessing Utete 00:03

Welcome to the second season of Big Business Insights, the Old Mutual Corporate podcast where we discuss issues that concern senior decision makers,  particularly human capital managers in large enterprises.  

Each episode focuses on one topic that is top of mind for today’s business leaders, aiming to provide you with key insights to improve your employees’ work experience and financial wellness, making your business fit for the future as you navigate towards it. 

I’m Blessing Utete and in this episode we’re going to discuss group risk benefits. It’s an area of employee benefits that’s seen a lot of change recently, pre- and post-Covid, with employers and employees enjoying much more choice than before. 

So today, I’ve invited Mariaan de Jongh, Old Mutual’s Group Assurance Business Executive, to help unlock the subject and give us some insight and pointers for employers. Welcome Mariaan.

Mariaan de Jongh 00:53

Hello, Blessing and thanks for having me.

Blessing Utete 00:56

All right, let’s get into it. Looking at the trends that we’re seeing from an employee benefits perspective, especially risk benefits, this year, what would you reflect on as the trends that you’ve seen?

Mariaan de Jongh 01:07

Covid forced employers to look carefully at their risk benefits and to consider whether these are still adequately meeting the needs of their members. A bigger focus on wellness has emerged, with many employers engaging with insurers to access their wellness offerings and also the offerings of specialised service providers. 

We have seen mortality risk stabilise after Covid, but we have also seen an increasing number of mental health related claims on the disability side. And of course the world of hybrid and work-from-home means that insurers and employers have had to reconsider what it means to be actively at work.

Blessing Utete 01:44

Those are some interesting insights and trends, Mariaan. I think we’re going to really have some insightful conversations around some of those topics you’ve highlighted. But if we just focus now on death and disability benefits in South Africa post-Covid, what does that look like?

Mariaan de Jongh 01:57

Death and disability products have definitely been in the spotlight recently, with the focus being on having adequate cover in place for members and their families to support them through times of need. 

The products themselves are very well developed, they’re comprehensive and flexible and as such not much has changed in this space. What has changed is the value that is placed on these benefits and the extent to which employees and employers engage with their risk benefits. 

Employees are much more aware of the benefits and are keen to get the most out of their benefits packages.

Blessing Utete 02:33

So, is there anything new that’s being offered from a benefits perspective?

Mariaan de Jongh 02:38

As I mentioned, the products are fairly well developed, and because of this, in response to the greater engagement with the benefits, insurers are focusing on improving the customer experience. 

A key theme around this is wellness, with many initiatives being centred around claims and supporting claimants in going back to work.

Blessing Utete 02:59

Mariaan, obviously you’ve spoken about the issues around Covid and one would

expect that there’s been some work done around just the pace at which claims can be settled. What’s happening on that front?

Mariaan de Jongh 03:10

Many insurers are focusing on increasing the levels of automation in their processes

following Covid. A lot of this is focused around the speed at which claims are being

processed and paid. Insurers are also increasingly focusing on the frequency and the quality of the communication with end-members as opposed to just communicating with the employers or the funds.

Blessing Utete 03:34

We’re seeing that it’s changing into an almost cafeteria-like system where employers

and employees can choose multiple versions of employee benefits, particularly on the risk benefits front. 

What does the system look like in practice and what are the effects?

Mariaan de Jongh 03:48

Flexible risk benefits have been around for some time, but since Covid we’ve seen an increased interest in them as employers are reconsidering their benefits packages. 

This kind of product shifts the purchasing decision from the employer to the employee and enables employees to select a package of benefits that suit their needs within a specific budget. For example, a young single person with no children might choose to decrease their level of death cover but increase disability cover to reflect the long expected working life that they have ahead of them. 

Another benefit of this system is that it’s dynamic. Employees can adjust the level of cover to suit their changing needs. For example, if somebody buys a house they can decide to increase their risk cover. The result of this is that an employer will allocate a certain budget to risk products but they will end up with a pool of benefits that is customised to meet the needs of each employee rather than everybody getting the average benefit.

Blessing Utete 04:50

But how does this system then dovetail with increased awareness of benefits?

Mariaan de Jongh 04:56

These type of benefits allow employees the opportunity to engage with their risk benefits and select the benefits that are most appropriate to their needs. As such, it ensures that there is a better match to the needs and contributes to greater financial wellness amongst employees. 

And of course, for this type of system to work, access to good financial advice is critical.

Blessing Utete 05:20

And from an employer perspective, in terms of just how they go about putting together a package like that, what would be some of the things that you would suggest an employer considers when they think of going flexible?

Mariaan de Jongh 05:31

Group risk benefits can be quite complex and there are a lot of options available. The most important thing for an employer is to select the benefits that will best suit the needs of their particular employees. 

So, I would have to say in this case the value of a good risk benefit consultant can’t be underestimated. Blessing, that’s where you come in!

Blessing Utete 05:53

Yeah, we’ll gladly help employers with that kind of complex decision-making. 

The other aspect is around the employer’s value proposition to the employees. And I think when you talk flexibility, this is a key part of an employer’s value proposition to employees. 

So, from an organisational perspective, how should human capital or the human resources teams manage these things?

Mariaan de Jongh 06:17

And that’s right, Blessing. Flexible risk benefits can be a powerful addition to an employer’s benefits package and contribute towards staff retention. There’s an onus on employers and insurers to create an environment of understanding. This can be achieved through including a risk benefits module as part of induction training or through various other sources. 

Other information can be made available on the employer’s intranet, such as informational videos, and it can also be supported by emails or regular communications reminding employees of the choices that are available to them. 

As I mentioned before, for this to work, it is important that employees have access to good financial advice.

Blessing Utete 07:03

There seems to be a very valuable component that employees miss in risk benefits, which is the funeral benefits part of risk benefits. Why are they such a strong value proposition within group risk benefits? And are employees generally aware of the existence of these and their real value?

Mariaan de Jongh 07:19

Great question. Funeral policies are very powerful as they meet a very real and specific need, which is financial support to members and their families at the time of death of a loved one. A family funeral policy typically doesn’t cover the employee or the member only, but also the spouse and children, and the policies can even be extended beyond the immediate family if there is a financial obligation there. 

Another key benefit of these policies is that they pay out very quickly, often within days or sometimes even within hours after a claim is received. 

The policies are not underwritten so members do not have to undergo any medical underwriting and typically the cover would also not be kept.

Where funeral policies are purchased individually, a waiting period will typically apply, but for group policies where cover is compulsory for all the employees there will typically be no waiting period.

Blessing Utete 08:18

Interesting. I think we also know that quite often, employees will have too much cover. They’ll have more policies than they actually need. 

What do you think needs to happen around awareness and education?

Mariaan de Jongh 08:30

Unfortunately, we do see instances where members purchase multiple funeral policies.

This means that typically the importance and the value of the product is understood, but there might be a lack of awareness of the group risk benefits that the member might already have in place. 

Regular communication is important to increase awareness and to make sure that members are aware of all of the risk benefits that they have. It’s also important to consider the method of communication. 

For a white collar scheme, email might be appropriate because the employees are largely desk bound, but for a blue collar scheme, everybody might not get the emails, so it’s important to also consider other forms of communication. This could include flyers or posters, or physical announcements that are made to staff. 

In our experience, the most effective way of communication is to use a mix of all of these methods.

Blessing Utete 09:26

Thank you very much, Mariaan, for joining us today. It has really been great having your insights and knowledge around risk benefits.  

Mariaan de Jongh 09:33

Thank you, Blessing.

Blessing Utete 09:36

Thank you for listening to this episode of Big Business Insights. I hope this helps you do big business better. 

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To find out more about Old Mutual Corporate, visit oldmutual.co.za/corporate.

Melanie Walker 09:56

Old Mutual. Do great things every day. Old Mutual Life Assurance Company South Africa Limited is a licensed FSP and life insurer.