Adding Insurance to Employee Benefits Entrenches Staff Loyalty

In an evolving working world, cash is no longer enough today to recruit and retain top talent for your business. Providing an attractive benefits plan is just as important as a competitive benefits package can often speak louder than cash alone in recruit

According to Aon South Africa, short-term insurance benefits are now increasingly in demand from staff as their expectations of company obligations towards them continue to rise and competition in the open market for skills intensifies.

"Competitive organisations are realising the value in adding to the fundamental benefits packages that include healthcare, retirement and often disability insurance, with added benefits such as short-term insurance for employees’ personal needs. And the value to be derived from having a fully comprehensive employee benefits package that takes care of items such as vehicles and homes at more competitive rates than if approached individually is far reaching,” explains Lydia Ritchie, Employee Group Scheme Specialist at Aon South Africa.

Quite often, an employee will stay at a job that has less salary because the benefits are excellent and other employees who may be paid very well will leave their jobs because the benefits are simply not there. Anecdotal evidence suggests that the addition of short term insurance benefits is becoming a permanent feature of South African HR structures.

“It basically comes down to the issue of employer/employee relations on a broader front than the traditional benefits scenario, which have long been a given. Firstly and arguably most importantly, short term insurance value adds in the context of broad based employee benefits, are seen as an incentive to join and stay with a company.

“The perception is that a company that provides staff with access, via group schemes, to enhanced short term insurance benefits beyond those available to the individual employee in the open market, cares for its employees and is seen as a company that commands loyalty and respect and is indeed an employer of choice,” explains Lydia.

“In today’s financial and business climate consumers are under enormous financial stress. They remain heavily indebted and their disposable income is still under pressure, despite figures showing that the situation is easing. The reality is that the cost of living continues to rise alarmingly, petrol prices are increasingly dramatically and this is expected to have an upward impact in inflation.

“Moreover, skills shortages remain the single biggest challenge for most businesses and the cost of recruitment and training is significant. This does not begin to touch on the less definable costs of lost productivity and possible impacts on corporate image resulting from inexperienced staff as a result of high staff turnover,” explains Lydia.

In this scenario, employee stability is paramount and part of this stability has to do with the overall financial wellbeing of the employee, which has direct and indirect impacts on corporate viability. In the bigger context of employee benefits, there is a strong rationale for short term insurance value adds for employees, facilitated by employers in association with brokers offering Employee Group Schemes.

“The advantages to employees via group short term schemes are substantial. Key among these is the purchasing ‘muscle’ they bring to the equation, resulting in attractive premiums, wider covers and negotiating ‘clout’ with the underwriters when it comes to claims.

“Insurance is essentially a social security tool which has to do with the uncertainties and unpredictability of the future. Obtaining insurance for an asset means that in the case of loss of an asset, your staff member is financially compensated. The broker’s role in this context is to provide independent advice based on analysing the short term insurance needs of your staff members covering all the necessary bases while avoiding the pitfalls of both under-insurance and over-insurance.

“The important consideration in this scenario is that the insurance that’s offered has to be of quality and not mass-market, commoditized products. Employee Group Schemes of this nature are not about dumping sub-standard products onto company personnel as this would be counter-productive in the extreme. At Aon, we don’t take a one-size-fits-all approach. As a broker, we have access to an extensive and diverse range of insurance products to meet the needs of all individuals within the employer base. We approach each person on the basis of an individual client needs analysis, identifying the employee’s specific risk profile and insurance needs and then respond with an appropriate insurance product to meet those needs.

“Then there is the issue of support for the employer, encompassing marketing material which can be co-branded with the sponsoring company, informative workshops for employees, on site help desks, group presentations and so on, all under the control of a dedicated account manager.

“It all forms part of the bigger picture of staff stability and that in turn means less staff churn, lower recruitment and retraining costs and a more productive business in general where efficiencies and productivity derive from longer serving employees familiar with the workings of the company and who are inspired to perform by the reinforcement that management is concerned for their wellbeing beyond the factory or office doors,” concludes Lydia.