Breaking the mould in employee benefits

But the advent of self-insured EB initiatives and structures over the past number of years has changed all that significantly. These days, more and more corporates are opting for longer-term partnerships with alternative risk transfer providers – like cell captive insurers – to provide their employees with customised EB programmes whilst reaping the financial benefits often only gained over a period of time.

"A shortage of skills, coupled with increased corporate focus on sustainability in all its facets, means that companies have become far more employee-centric than they were in the past and this has created a definite trend towards the self-insurance of EB programmes. Being able to provide better benefits can be an important competitive advantage in a market that has such a dire shortage of skills,” says Francois Schaap, managing executive: life at Guardrisk Life.

Smart employers and funds are bolstering their self-insured EB programmes by putting in place proactive initiatives like employee wellness and rehabilitation programmes. This way, they minimise their risks and they get healthier employees who return to work more rapidly if they are injured or ill. The cost of the claim, say for disability and/or dread disease cover, is reduced significantly.

According to Schaap, it’s all about taking a long-term view, partnering with the self-insurance provider to give employees the best possible benefits and, with underwriting profits (derived in part from the company’s initiatives to improve employee wellness) accruing in the facility, there’s more money in the kitty to keep enhancing the benefits.

"The company gets healthier and more productive employees and the employees get better benefits and improved quality of life – and it doesn’t cost any more; in fact, it often saves money. So it’s truly win-win all round,” says Schaap, explaining why the trend towards self-insuring EB programmes is taking off worldwide among corporates and consultants.

In the traditional market there is less incentive towards rehabilitation because often the scheme has moved on to another insurer by the time the claimant is back at work. But in the self-insurance arena, rehabilitation plays a crucial role in reducing the overall cost of claims and is key to mitigating future claims. Thus the sooner the employee gets back to work, the lower the claim and the more money is available in the EB programme to further improve benefits for all employees.

"In self-insurance structures everyone has a vested interest and because the benefits are so easy to see employers and funds are easily incentivised to make it work. Employers tend to be more directly involved in their self-insured EB programmes because they can immediately see that lower claims translate into more profitable facilities,” says Schaap.

Self-insurance of EB needs a complete paradigm shift – suddenly the EB programme is no longer a one-size-fits-all scheme to be dusted off and renewed once a year. Self-insurance creates a dynamic platform within which employers can be innovative, and the more efficient the structure is, the more creative and inclusive the programme can be.

 

"Self-insurance of EB programmes calls for proactive risk management by companies that are constantly thinking about adding value, rather than simply paying claims,” says Schaap.

He cites monitoring absenteeism to identify potential problem areas early and putting mitigating programmes in place as quickly as possible as an example of proactive risk management that can make a significant contribution to the ‘bottom line’ of a self-insured EB programme.