PRINT PAGE
Nice to have or need to have?
Price and service remain the key battlegrounds in the group income protection market. But what additional benefits are being offered by insurers in an effort to stand out from their competitors? David Sawers reports
November 2008 Features
Advisers and benefit consultants are well aware of how important price and service are when companies are deciding which insurer should look after their group income protection (GIP) scheme.
But with notoriously poor service levels still plaguing the sector and price almost always still king, insurers are offering enhanced and additional benefits in an effort to make their offering stand out from their competitors.
Extra services being offered by providers range from employee assistance programmes (EAPs), which provide access to telephone and face-to-face counselling and advice for employees, to second opinion medical services and online health information guides. Some providers, including Bupa and Legal & General, even offer GIP scheme members discounts on things like consumer goods and wine club membership.
EAPs
Only last month, Unum, by far the largest provider of corporate IP in the UK, announced that it is to offer a free EAP to all of its clients. Through the EAP, provided by Ceridian, a multinational HR services company, employers can access online and telephone legal and employment help, as well as create tailored legal documents to save on legal advice costs. Employees can access telephone and face-to-face counselling, and ask for referrals for childcare and eldercare and online advice.
Unum’s so-called “embedded” offering means that employers and employees get limited free access to the EAP. Employers can pay extra for an “enhanced” offering which provides additional services including more counselling sessions for the employee and anonymised management reports for the employer.
Unum and Ceridian are rolling out a massive communication exercise to make employees and employers aware of the additional “free” service. Relevant literature and CDs can even be sent to employees’ homes and it is evident that Unum believes it could play a role in growing and maintaining its market share.
Other providers, however, remain split on whether or not offering a “free” EAP can make them more attractive to companies than their competitors.
Legal & General has been providing an EAP service at no extra cost for all of its Group Life, Group Income Protection and Group Critical Illness products for over seven years. Provided by Capita, the service offers telephone counselling with no restrictions. Up to three face-to-face counselling sessions per employee are offered at a discount and employers can then pay for additional ones at £65 a time.
Linda Baker, market development manager for GIP at L&G, says EAPs are becoming increasingly popular with both employees and employers.
She says: “During the last year, interest has increased dramatically, both in the number of schemes and also on the subsequent usage. In fact, our general call usage has trebled, plus the number of employers choosing our discounted face-to-face option has more than doubled.
“Advisers also appreciate having this service included as an integral part of the proposition, as it helps them win and retain more new business.”
However, other providers, including AEGON Scottish Equitable, Bupa, Canada Life, Friends Provident and Norwich Union Healthcare, do not offer EAPs as part of their core group risk propositions.
Steve Browning, group risk propositions manager at Friends Provident, says: “We don’t offer any form of EAP. The research we have done has shown that employers would prefer to source it for themselves, so that the EAP is suited to their needs. We are also concerned about the tax position of EAPs. There is still a doubt hanging over EAPs in terms of whether or not they should incur a P11D charge.”
SERVICES OTHER THAN EAPs
Companies insured by Canada Life also have to source their own EAP if they choose to offer it to staff. What the provider does offer, however, is free access to an online and telephone service called BusinessCare, which gives employers information on a wide range of subjects, from legal matters to stress issues. The service also means employers can get information through a 24-hour phone line or online and keep up to date on legal matters and receive news bulletins and newsletters about changes in IP schemes.
Colin Micklewright, head of IP business development at Canada Life, says: “There is a wide range of issues that BusinessCare can help employers with. Things like advice around the EU Working Time Directive or wellbeing issues, welfare reform, age discrimination and A-Day. It was developed originally for SMEs, but larger clients like it too. It can be a lot cheaper than sourcing the advice and guidance from elsewhere.”
Likewise, Friends Provident is currently looking at offering an additional benefit designed for the employer, rather than an employee bolt on, as part of its GIP product, says Browning.
Rather than offering an EAP as part of its group risk proposition, AEGON Scottish Equitable, meanwhile, provides employees with access to RED ARC, a post-claim counselling and support service.
Simon Bailey, head of marketing for employee benefits at the provider, says: “RED ARC isn’t just a telephone number – we only offer it after a claim is made. Eighty five per cent of people that are offered RED ARC go on to use it. It’s done on a claims made, not a claims paid, basis.
“We’ve stayed away from EAPs because take up rates are so low – they’re less than 10%. They don’t really add much value to employers or employees. The world of helplines is very congested – they’re offered with credit cards, with private medical insurance and so on. They also tend to be a bit passive.”
According to Bailey, AEGON Scottish Equitable’s recent announcement that it has formed a partnership to work with independent experts in musculoskeletal and mental healthcare from Nuffield Health and Priory Group is clear evidence that additional services being offered by GIP providers should be focused around medical, clinical and return to work issues, as opposed to EAPs and “other frills and nice-to-haves”.
“Traditionally, we’ve been very sceptical of bolt-ons and add-ons because a lot of the time they become detached,” he says. “It can lead to confusion for intermediaries and employers. If we do offer something, we make sure that it’s integrated into what we offer. The Nuffield and Priory deals are about making sure that we provide access to the highest quality of care possible. We’ve always used external specialists. We decided to really make sure we were getting the very best quality.”
IN HOUSE INSURER PROVISION
However, insurance providers with a broader background in health and healthcare provision argue that they are at an advantage when it comes to providing services such as these.
Graham Clark, director of group risk at Bupa, says that the provider’s in house expertise means that a lot of the rehabilitation services it offers are provided from within the Bupa group.
He adds: “We can source them from in house and because we don’t have to cover the profit margins of external rehab providers, we can remain very competitive on price.”
In terms of EAPs, Bupa does not offer one as an integrated part of its group risk offering. Instead, it offers members access to HealthLine, a telephone line manned by Bupa nurses. In addition, members get access to Bupa Positive Health, an online system, and employers can pay for Bupa 360° Health Risk Management, an end-to-end case management service that covers health risk management issues and provides an integration of healthcare provision capabilities. In certain cases, if employers purchase Bupa 360°, they will receive a discount on their GIP premium which can effectively “pay” for the 360° service itself, says Clark.
Nick Homer, senior propositions manager at Norwich Union Healthcare, meanwhile, says its internal occupational health capabilities mean that it, too, can remain competitive while offering “additional” services that are of specific relevance to an employer’s wider healthcare strategy.
He says: “We don’t want to simply bolt on additional services. We want to deliver employer solutions which can be aligned in meaningful ways.”
NUH’s core offering includes the Personal Health Manager online tool as well as access to a 24-hour GP helpline and stress counselling line. Its Health Vision proposition also gives employer an insight into the health of their workforce and what benefits and interventions they should consider to best manage GIP claims and wellbeing in general.
As for other additional benefits, Norwich Union Healthcare is very careful about what it offers as part of its core IP proposition, Homer says.
“There’s always a balance between what you include and what you leave out, especially when everyone knows that price is such an issue. We don’t just want to throw things in if people don’t see the value in them.”
One “add-on” that Norwich Union Healthcare will not be offering is Best Doctors, the medical referral and second opinion service. In addition to partnerships with insurers in Ireland, Best Doctors is already offered by Canada Life and Generali Employee Benefits to their GIP clients in the UK. However, although Canada Life’s Micklewright says the service appeals to HR managers who want to differentiate their proposition, Norwich Union Healthcare is unconvinced, Homer says.
“As a provider of medical insurance, just sourcing a doctor without funding it is a bit meaningless in our view,” Homer says.
Nevertheless, Canada Life’s Micklewright suggests that add-on services such as Best Doctors have a valid role to play in the wider framework of GIP provision.
He says: “In the 20 years I’ve been doing this, there has been more appetite in the last 12-18 months for insurance solutions than ever before. And insurance can offer objective medical evidence, it brings everything together.”
So, are add-ons enough to sway your corporate clients? Bupa’s Clark says it often depends on the culture of the company.
“Price is the dominant factor and service is essential, but add-ons are attractive to some employers and employees,” he says. “Some employers appreciate the fact that members are getting a benefit from the scheme without them needing to make a claim. This helps employers to demonstrate that what they provide does have a value to the employee.”
Even providers that do offer a range of bolt ons concede that service and price remain paramount. L&G’s Baker is representative when she says: “In our experience, advisers predominantly want a competitive price backed up by good service, and are less interested in the added value benefits. It takes time to explain the value of these benefits to employers, and it’s not always cost effective for them to do so.
“However, there are good examples of benefits which don’t necessarily help advisers win business, but are highly appreciated by employers when presented to them. In fact, they are usually pleasantly surprised to see them included as part of their insurance policy.”
Turn over to read expert insight into group risk scheme design from a specialist adviser in the sector
MALCOLM BREBNER, DIRECTOR, FULCRUM INSURED EMPLOYEE BENEFITS
EMPLOYERS ‘MISSING OUT’ ON INSURERS’ MORE FLEXIBLE APPROACH TO IP DESIGN
Insurers are offering an increasingly flexible approach to the design and set-up of income protection (IP) schemes – and employers should not “make do” with their existing plans if they are not suitable for them, according to Malcolm Brebner, a specialist employee benefits consultant.
Brebner, who is director of Fulcrum insured employee benefits (
Brebner says that when he meets employers who are struggling with their IP contracts there are usually three common issues: the current decision maker failed to make the original purchase; the route cause of their cost/service issues is poor plan design; and, ironically, the quality of advice they are already receiving is hindering rather than enhancing the flow of information that would help insurers do a better job. “Poor plan design and communication is more likely to happen when a non-specialist adviser is involved and insurers are ‘locked out’ of the creative problem solving process,” Brebner says. “The financial drivers for insurers these days mean that they want well designed and fairly funded contracts, just as much as clients do – and given the right opportunity, the right information, and a little notice, they can be more innovative than they are often given credit for.”
Brebner argues that the prime mover in any creative benefits review should be a specialist intermediary.
“Brokers who assume that employers have made technically informed, settled decisions about their current benefit plans – or who don’t understand the design variables that are available – have little else to offer, other than re-broking sometimes potentially flawed designs,” he says. “In many of the cases that I’ve reviewed, the original scheme was set up by a non-risk specialist -typically the company’s pension adviser”.
While some do an “adequate” job, Brebner suggests that in many cases the design is inappropriate and the financial exposure is “a lot more than employers would have signed up for if they had properly understood their options”.
Brebner, who set up Fulcrum last year, says that employers often feel tied indefinitely to their existing scheme, because of a common misconception – that changing it in any way could impact on their employees who are already off work and claiming the benefit.
But, according to Brebner, there is “no way” that existing claimants would be impacted by future changes and this should not inhibit employers in tackling design problems.
He says: “Because I’m entirely group risk-focused, a number of pensions and group commercial specialists who are finding out about me are starting to refer difficult IP cases. There’s no conflict because I don’t cross over their core relationship. I’m just there to find the best risk solution.
“Group medical and IP schemes are two prime examples of contracts that have become a lot more flexible in terms of what’s covered, how they operate and the funding options available – and employers simply can’t afford not to know this stuff”.
Bookmark with: (What is this?)