Employees ‘front and centre’ in group risk innovation

02 November 2022 Gareth Stokes

Life insurers with group risk exposure were significantly impacted by COVID-19, both in terms of fielding and processing the significant spike in death claims and in ensuring operational continuity through lockdown. “The industry should be commended for paying the number and quantum of claims that we did during the pandemic,” said Angela Mhlanga, CEO at Hollard Group Risk. She added that the pandemic had brought life insurers’ resilience into sharp focus, reaffirming the importance of strong balance sheets and operational

The shifting employee benefits landscape

Mhlanga was commenting during a panel discussion that was tasked with evaluating post-pandemic shifts in South Africa’s employee benefits landscape, held at the 2022 Allan Gray Retirement Benefits Conference. The discussion was expertly led by Michael Porter, MD at RGA Reinsurance Company of South Africa, though he was forced to navigate connectivity issues in addition to the complex employee benefit landscape. The first item on the agenda was to assess how South Africa’s life insurers had navigated pandemic and lockdown. “We learned a couple of lessons through pandemic, with one being that insurers, and maybe even South Africans as a nation, tend to have a very positive bias,” said Michele Jennings, CEO at Sanlam Group Risk. 

Jennings observed that all stakeholders in the insurance value chain seemed to have underestimated the impact that COVID-19 would have on lives and livelihoods. It was also clear that many life insurers had “dropped the ball” on occasion, as they faced up to the realities of resource constraints caused by a flood of claims and operational challenges linked to remote working. “We did the best that we could under the circumstances and without much warning, nobody could have anticipated how the pandemic and lockdown played out,” she said. Every country walked a different pandemic path, with the extent and timing of COVID-19 infections and deaths varying significantly, as did the nature of regulatory interventions. 

SA’s group risk providers facing a broadside!

Unfortunately, South Africa was particularly hard hit from a group risk claims perspective. “The domestic market, especially in the group risk space servicing the employed section of the population, appears to have suffered more than many other markets,” said Rudi van Rooyen, Head: Group Insurance at Momentum Corporate. This experience exhibited firstly as a surge in death claims numbers, which was largely expected, and secondly, as a far higher average claim amount than during pre-pandemic claims periods. The obvious consequence of this higher-than-average claims experience is that group life premiums are on the rise, with group disability rates following a similar path as the impact of long-COVID becomes apparent. 

The panel spent some time reflecting on how digitisation had helped life insurers and their employees to navigate the pandemic and lockdown environment. “Our employees really struggled with the concept of making everything paperless, almost overnight, but we managed to do it,” said Jennings. Today, more than two-and-a-half years after the frantic lockdown adjustment, most insurers cannot believe that they did not adopt digitisation sooner. “Everything has become that much simpler thanks to it being electronic, and what stands out about the last couple of years is the amount of progress that has been made following on from those initial steps,” she said. 

Porter agreed, saying that digitisation and / or digitalisation had been on the ‘to do’ list of many insurers pre-pandemic. “Insurers really had to step up and make sure that they could deliver their product and services in a digital way,” he said. Of course, pandemic has only been one of many hurdles that local life insurers have had to clear in recent years. The ongoing tweaking of the regulatory environment to embed treating customers fairly (TCF) principles has forced many to take a long, hard look at their internal processes and systems. As such, Porter asked the panellists to comment on the impact of ongoing enhancements to Policyholder Protection Rules (PPRs). The PPR is a set of 21 rules that create the TCF framework for life insurers’ interactions with customers. 

Delivering fair outcomes to customers

It is worth noting that the PPRs are relevant to all stakeholders in the employee benefits value chain, including the employer, the fund, the fund members, insurers, intermediaries and policyholders. “It is, however, the insurer that is held responsible for the delivery of fair outcomes, and for the PPR implementation,” said Jennings, who added that there had been a marked increase in invasive monitoring by the regulator in recent times. Van Rooyen observed that the biggest PPR-related challenge remained with receiving members’ data in order to communicate to them. “Life insurers cannot do this in isolation, we need all stakeholders including employers, intermediaries and members to assist by providing the information to enable us to communicate with members, in compliance with the legislation and PPR rules,” he said.

In this context, it has become imperative that communications between employer, fund, fund member, insurer and retirement fund administrator take place seamlessly. The conversation turned to innovation and some reflection on what the future might hold for life insurers active in the employee benefits realm. Mhlanga said that life insurers had to realise that their clients, and potential clients, had already bought into digital solutions. “We need to use [digital platforms and other technology innovations] to better service the end client, and at the same time the industry must continue to invest [in solutions] that make advisers and intermediaries more efficient,” she said. It was suggested that the integration and sharing of data between stakeholders would improve efficiencies and ensure the convergence of wellness in the industry. 

“The integration of wellness and insurance is something that is potentially very meaningful for our markets; in my view health aggregators and similar kinds of innovations will enhance the group risk offering,” commented Porter. An example of such innovation is software that can perform basic medical underwriting tests using a smartphone and video clip of the subject. “We are going to see advances in technology that will lead to improved client experiences and seamless transacting,” said Jennings, who singled out technology as the catalyst that would drive change in the group risk market, after years of stagnation. 

Improving access to insurance

Finally, Porter challenged panellists to share their passion for employee benefits and group risk. “The industry serves a meaningful purpose, [especially] when one considers the socioeconomic benefits of insuring breadwinners; the efficacy of the various group risk covers was demonstrated during the COVID-19 period,” concluded Mhlanga, who also noted the important role that group risk plays in improving access to insurance, allowing anyone in the formal employment sector to get reasonable cover for death and disability benefits with a minimum level of medical underwriting. 

“If you do not have passion for this industry, then you would not have the resilience to get up each day and deliver on the promises that we have made to our clients,” concluded Jennings, leaving it to Van Rooyen to have the final word. He obliged, concluding that “we all work in a competitive environment, and we have to keep each other on our proverbial toes; but that is part of what makes the market interesting … remember, everything [happening in the group risk marketplace] should be skewed towards the benefit of the employees”. 

Writer’s thoughts:

Group risk is often suggested as an area of business that financial advisers could add to their practices, without too much effort. And it makes sense that smaller financial advice practices would be perfectly positioned to service the SMME market. Do you agree, or are group risk solutions simply too expensive for your SMME clients? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts



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