Advisers bring balance to group risk benefits
The motivation for group risk benefits can be framed from the employee or employer side. In the former case, it helps individuals to access life insurance cover they may not have been able to obtain in their individual capacity; in the latter, it helps firms deliver a holistic value offering to attract and retain staff.
The human element in group risk
“Group risk is often undervalued when it comes to the pivotal role it plays in managing claims and helping to reintegrate a claimant into the workforce,” said Brice Salence Nunes, Head of Customer Proposition at Old Mutual Group Assurance Products. Nunes, who warned against missing the human element of this often-commoditised solution, was the first participant in a three-person panel discussion held on day one of the 2025 Allan Gray Retirement Benefits Conference.
Panel moderator, Ielyaas Gamiet of Allan Gray, noted that the three financial services brands on the panel accounted for approximately half of the group risk insurance premiums in the domestic market. He had started proceedings by asking the participants to introduce the cover type. “Some of the language we use tends to desensitise us; we are dealing with breadwinners,” noted San-Marie Crause, Managing Executive for Sanlam Group Risk. She said the risk insurance industry protected families when a breadwinner suffered a catastrophe.
Gamiet then asked about the part that group risk benefits could play in narrowing South Africa’s well-publicised insurance gap. “Group risk offers a basic level of compulsory cover for employees or retirement fund members,” said Rudi van Rooyen, Executive Head: Actuarial at Hollard Group Risk. The fact that premiums are deducted from the employee’s salary prevents individuals from abandoning cover due to financial strain. Individual insureds also benefit from a free cover limit without the need for medical underwriting.
Addressing aggregation and over-insurance
The sums insured under a group risk policy can introduce challenges for advisers and employee benefits consultants. Gamiet asked about aggregation of income disability benefits in the event an insured held more than one insurance policy. Van Rooyen said the core principle of insurance was not to put someone in a better position after a claim than they were in before the loss occurred, adding that advisers played a key role in preventing over-insurance at an individual level.
To underwrite sustainably, income disability insurers must set appropriate premiums, offer sensible sums insured and actively manage income disability claims. This is especially important given the growing number of insureds being diagnosed with cancer. “Close to 20% of all the claims on our income disability book have cancer involved,” Crause said. “And this rises to over 50% for severe illness claims.” She observed that severe illness was relevant to both low- and high-income group risk members, and encouraged the industry to define the cover in a balanced, inclusive way.
Nunes flagged mental health as a serious issue in the income disability space, noting a substantial increase in the proportion of claims for this cause. “The assessment process remains a key challenge where mental health is involved in disability claims,” she said. Unlike with cancer, where there are medical tests that conclusively show that a person has the disease, mental illness assessments involve a lot of self-reporting. Industry is responding to this worrying trend through employee wellness initiatives.
Obesity an accelerant for other diseases
Van Rooyen commented on South Africa’s looming obesity challenges. Obesity is concerning to group risk insurers because it is an underlying cause of many other illnesses. “There are strong links between obesity and increased risks of cancers, heart conditions, hypertension, mental health and type two diabetes,” he said. Obesity is largely rooted in lifestyle, but it remains difficult to convince insureds to commit to diet and exercise regimens despite continued outreach through communication and wellness incentives.
The evolving burden of disease has contributed to product innovation, as group risk specialists try to extend the coverage available through employers and retirement funds. Crause offered some insights into cancer-specific products under her brand. “The produce offers a cancer-specific benefit as opposed to the full range of severe illnesses that are typically covered,” she said, adding that the focus was on accessibility and affordability. Crause called on her peers to pay closer attention to the mainstream group risk products.
A question about the balance between disability and severe illness in the group risk space prompted Van Rooyen to offer a brief explainer of the product universe. Disability income exists to replace the insured’s income in the event they are unable to perform their duties. But this individual’s ability to work is not always impacted on the diagnosis of a severe illness, meaning the disability cover will not respond. “Each product caters for different needs; you need to find the balance between affordability and need,” he said. This exercise should also address the perception that a medical aid plus gap cover negates the need for other risk insurance.
Calling advisers and EB consultants
The message to advisers and employee benefits consultants: you must ensure that you balance retirement, medical aid, death, disability and severe illness cover. Insurers must play their part by educating employers and financial advisers on the prevalence of illnesses and how their group risk covers respond, if at all. Nunes observed that reaching the end-member presented challenges, and lamented the poor uptake of critical illness covers in the group risk space. This cover currently makes up only 3% of group risk premium.
Gamiet referenced the latest Sanlam Benchmark which showed that group risk was the least understood component in the broader employee benefits suite. “Reaching the employees is more difficult in a group risk environment,” Van Rooyen conceded. “On the individual life side, you have direct access to the member or to the policyholder whereas in group risk you typically work through an intermediary and then an employer, and only then do you get to the employee.” In this context, much of the consumer education is thrown out into the ether in the hope that members somehow pick it up.
“The educational challenges that we have vary across the stakeholder groups that we have mentioned,” Crause said. She noted that consultants and retirement fund trustees were “very knowledgeable” about the benefits offered under group risk, and that the challenge was bringing employers up to speed. This explains why the annual Benchmark survey includes employers alongside standalone and umbrella funds. On a final point, the panel complained that it was increasingly difficult to connect with members via conventional channels like emails.
Innovate to communicate
According to Crause, insurers will have to innovate to communicate: “We must continue to send out emails and webinar invites, but we need to supplement those with modern means of communication.” Alternatives include WhatsApp and using web applications to drive employee participation in rewards or wellness programmes. The Holy Grail in this regard may be to create a single point of contact for all insureds, and use that channel to promote healthy behaviour with the long-term goal of preventing disability claims.
Nunes closed with a plea for stakeholders to refocus on the material issue of beneficiary nomination forms not being readily available across the ecosystem or not completed by members. “If you delay the payment of a claim, you are attacking the fundamentals of what group risk benefits are meant to do,” she said.
Writer’s thoughts:
Group risk has long been the underdog in employee benefits, but this discussion highlighted its evolving role in health, financial resilience and even behavioural change. Are intermediaries doing enough to make group risk visible, understood and valued? Please comment below, interact with us on X at @fanews_online or email us your thoughts
