Health and risk insurance is not too unlike gambling, as an employer is laying a bet against the probability of a claim occurring. The problem is, as with all gambling, the house always wins. Insurers have to set the rules, odds and pricing in a way that enables them to control their risk and stay in business. Employers, like gamblers, can feel compelled to keep renewing their scheme – even when the decision to open it was made decades ago, when the business was quite different.
Should we stick or twist?
Changing a set behaviour is always difficult, but there are now two factors at play that mean employers cannot afford to carry on gambling with their health and wellbeing spend.
Social shifts: Social change means we are seeing shifts in illness type, with more and more cases of diabetes, heart disease and cancers – diseases closely linked to our lifestyle, and the amount of time many spend sitting at their desks.
Social change is also driving up healthcare costs, across countries and within businesses. The declining number of healthcare providers, combined with decreasing scheme take-up since the recession, means that costs have continued to rise. As a result, we’re seeing the uptake of PMI decreasing among the young and healthy members of the workforce.
Legislative change: The Competition and Markets Authority has carried out a lengthy investigation into competition in the PMI provider market, and found several barriers. While a series of remedies have been proposed, a question mark hangs over how effective these will be in reducing costs. Welfare reform is also driving costs up, by placing an increasing onus on employers to provide for employees. Insurance premium tax is also likely to rise again in the near future as, at 10%, it sits below other insurance premium taxes in the UK and Europe.
What does the market look like today?
Employers, consultants and providers are well aware that PMI is not a structurally sound cornerstone for their health and wellbeing policies. For some time, there’s been a move towards rethinking the whole area; stopping insurances, taking control of spending, and delivering benefits that proactively take care of employees’ health. Technology is, and will continue to play a fundamental role in this new approach, offering the medical sector opportunities to improve access to healthcare and new ways to monitor and manage illness. Meanwhile employers will be able to target spending and focus benefits in a way that really engages employees and meets their healthcare needs now and in the future.
How does your strategy need to change?
1. Start with the business: The health and wellbeing strategy in many organisations is built from legacy benefits, and is based on policies and procedures that have been built to deal with specific crises. This needs to change. You need to start by looking at your business, asking questions such as: How does the strategy impact your employees’ health? And how is this impacting your company’s ability to deliver against objectives? You can then move forward and look at policies and procedures, and assess which tactics, tools and technology will aid these objectives.
2. Get savvy with your strategy: Take the time to analyse your workforce profile. Look at common claims and review what aspects of heath you can support to avoid these. Also consider the value vs. engagement balance; You need to spend on what employees’ want, while keeping in mind what is effective. Finally, think long-term. It makes business sense to align what you buy now with your business’ future needs. If you need employees to be comfortable sitting at their desks for long days – consider investing in classes such as yoga and Pilates to keep back health issues at bay.
3. Take advantage of tech: Health hubs, such as those accessible via our DarwinTM software, are simple mechanisms for displaying, communicating and engaging employees in the products and services you already provide. Simple versions of these can be built quickly, but we’re also creating increasingly complex and interactive platforms, which provide HR and reward professionals with valuable insight into benefits take-up and help determine ROI.
It’s clear that change is afoot in the way organisations approach the health and wellbeing of their employees. Tired of gambling with their benefits spend, they are re-thinking benefits that are limited to aiding already sick employees, and instead channelling funds into encouraging employees to take responsibility for their own health. In future, we’ll see more of this, and an explosion in flex pots and reimbursement accounts as a result. Technology will provide the final piece in the wellness puzzle. Taking a tech-enabled approach to wellness, employers will be able to effectively target communications, improve access to advice and care for employees, and understand the real ROI for their business.
To learn more about how modern health & wellbeing solutions can benefit your employees and business, view our webinar: "Are you gambling with your employees’ health & wellbeing?”
This article was written by Luke Prankard, Senior Health and Wellbeing Consultant at Thomsons Online Benefits.