Insurance | What to watch out for: group protection reviews & renewals

By Tracey Ward, Head of Business Development and Marketing, at Generali UK Employee Benefits

As group life and income protection renewal season rapidly approaches, we take a look at what to watch out for in 2022; from premium sustainability and how hard the policy is working to support wellbeing needs, to supplier ESG principles and practices.

Firstly, premiums. Many insurers last year increased their rates due to the pandemic, as we reported in an article in HR Grapevine last spring. And all signs point to the same again this year.

It is therefore more important than ever to shop around to find providers that can evidence sustainable, below market average pricing over a number of years. Because although the prevailing market conditions – from the macro to the local economy – are faced by all insurers, the way in which they approach pricing and balance risk across portfolios is quite different, hence pricing variations vary not only from provider to provider, but also from scheme to scheme.

Impacts on premiums

The impact on pricing is due to a combination of factors, from the pandemic’s effect on the economy, on mortality and on life expectancy, to the potential for higher claims costs where patient diagnoses and treatment have been delayed.

Long Covid

Long Covid also represents a significant factor. Latest data indicates that an estimated 1.3 million in the UK were experiencing self-reported Long Covid - symptoms persisting for more than four weeks after the first suspected Covid-19 infection - at the end of last year.¹

Life expectancy & mortality

With regards to UK life expectancy, this was slowing pre pandemic after decades of improvement. Then in 2020, the Covid-19 pandemic represented a significant turning point, causing a sharp fall in life expectancy, the magnitude of which has not been seen since World War II, reports The King’s Fund. Life expectancy in England in 2020 fell to 78.6 years for males and to 82.6 years for females, the level of a decade ago.²

This experience was mirrored across many Western European countries such as Spain, Italy and Belgium.

In addition, of course, mortality rates spiked in 2020 and 2021 due to Covid-19.³

All of these factors – and more – impact insurer risk analysis and pricing models, with significant premium increases representing the end result in cases where insurers priced low to win business pre pandemic.

Price vs value

Meanwhile, although price will always be a significant driver in renewals, it’s worth carefully considering value. In other words, how hard is your current scheme working for you. Where group income protection is concerned, insurers have become increasingly sophisticated with regards to supporting prevention, early intervention and rehabilitation; everything from support for Occupational Health, HR and Line Managers with psychological safety risk assessments and preventative initiatives such as wellbeing communications, mental health support and eldercare services, to day one absence interventions and personalised rehabilitative care pathways.

Some insurers will even help clients fund a specialist wellbeing product or service that falls out of their usual remit, where a specific need is identified.

Also consider how well the insurer is placed to support the health and wellbeing requirements of employees in the changing ways of working; remote; global and cross-border requirements.

ESG in its entirety

Last but certainly not least, how important is ESG to your insurer? Are they, as a supplier to your organisation, aligned with your ESG strategy? There is a growing need for organisations to set specific ESG targets for their suppliers, including incorporating ESG into procurement evaluation criteria.

This is something that responsible employee benefit consultants and insurers are very focused on; both as suppliers to clients and as part of their own procurement processes when assessing the third-party wellbeing specialists that they work with, for example.

Top tips for constructive insurer reviews

• Speak to your consultant and/or insurer about what is important to your organisation with regards to ESG. At the same time, find out about their organisation’s ESG principles and practices. Consider everything from: responsible investments and operations; to customer and employee experience; as well as support to the communities in which the business operates.

• Factor in embedded value services and special terms or features. For example, all group income protection providers include complimentary access to various prevention, early intervention and rehabilitation services plus, in some cases, support for HR and Line Managers too in terms of helping managers better handle difficult employee situations, thereby avoiding intensification of problems that go unaddressed. Working in partnership with your insurer, you can ensure that all these services are maximised and measurable.

• Examine whether the products and services meet with the requirements of new ways of working. Employers are re-evaluating benefits offerings to help tackle Covid-19 related challenges. For instance, virtual and hybrid working can mean a shift to centralised HR. So, ask your insurer how they can best support these shifts with regards to global health and wellbeing products and services.

• Start early and consider a wide review. Insurers can take different approaches to underwriting when trying to quote the best terms, so starting early can pay dividend. It will also give you the time to consider conducting a wider review of the market; essential considering that the market is currently seeing a wide range of rates being quoted for the same business.

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