Income Protection  

Meeting the changing expectations towards employee benefits

The NHS means that in the UK, Health Insurance and remote GP services (demand for the latter saw a staggering percentage rate increase of 264.2 per cent between 2019 and 2021) are simply ‘nice to have’. They are not essential – much of the growth in demand for them is related to coronavirus and worries about healthcare access during the pandemic.

Yet the NHS has faced lower annual budget increases over the past decade compared with previous periods, plus an ageing population. It therefore faced pressure even before Covid-19 struck.

Employees expecting healthcare benefits to partly replace the NHS is a very Americanised view. Is that the path we want UK healthcare to tread?

As insurance advisers, growth in demand for employee benefits as a good thing. However, we do worry that growing clamour for benefits abrogates personal responsibility for individuals to protect themselves.

While it is obviously desirable for employees to have employers pay for protection, it is rarely a substitute for tailored, individual policies that exactly meet a client’s needs.

For example, imagine a death-in-service scheme paying three-times salary. That is great, but would it both repay workers' mortgages and ensure their families are financially secure? This is unlikely, which just underlines the demand for personal cover over and above the base level of protection offered by workplace benefits.

Tailor made

With this in mind, insurers could perhaps consider giving employees the opportunity to tailor their policies to meet their individual circumstances. This is currently only available at the largest companies with the most employees.

Another issue the industry could address is creating ‘portable’ benefits. Currently, benefits do not follow workers. If they move on or are made redundant, they lose coverage.

It is already possible to convert certain plans, for example shifting company-paid relevant life insurance to a personal policy, or retaining group health insurance after retiring or leaving your employer.

However, this is not usually true for group risk. One area the industry could examine is whether it is feasible for all group policies to be convertible when an employee leaves an employer.

Clearly, so much has changed in such a short period that the industry will have to adapt to meet the future needs of both employers and employees.