Innovative EB management

Although the group risk market is very competitive due to the fact that employer schemes can be rebrokered annually, factors such as the increased mortality risks from HIV/AIDS have caused the cost of employee life and disability cover to increase. This has lead to either a reduction in the amount of cover available to the employee, or the need to increase the contributions from the employee to maintain the previous levels of cover.

There are, however, many ways in which organisations can improve the mortality and disability risk of employees, such as the improved management of employee benefit schemes, the introduction of wellness programmes and the correct structuring of risk with a company's risk management providers. Packaged deals or integrated risk benefits, in terms of group life cover, disability income and wellness programmes are an excellent way to manage sickness and absenteeism, as well as avoid any unexpected and unplanned mortality and disability claims.

Improvement expected

"Through the improved management of risk cover and the innovative products being offered in the South African market at the moment, we should see an improvement in employee benefits and an increase in workforce productivity," comments Bernard Ross, executive director at RGA Reinsurance Company of South Africa.

Proactive solutions

"There are various proactive solutions that can be taken by employers, as well as employees to aid in the reduction of risk. These could include continued education programmes and counseling, the provision of health and wellness facilities such as gyms and mobile clinics, and the management of critical diseases such as HIV/AIDS. Organisations could, for instance, sponsor counseling and the distribution of antiretrovirals to HIV positive employees, which would allow them to continue working at a productive level," says Ross.

Cell captive structure

"For large organisations, there are various options available to aid in the improved management of employee benefits and minimise the financial risk for the company. For instance, using a cell captive structure allows companies to manage the mortality or disability risk downwards, which means the employer takes on the risk at the bottom end, while the reinsurer takes on the stop loss risk at the top end," continues Ross.

"This is important for large organisations that have a workforce that is more susceptible to HIV/AIDS. For example, measures such as HIV/AIDS management programmes, absenteeism management and focused occupational health programmes will reduce claims due to AIDS. The implementation of a stop loss structure thus provides a direct benefit to the organisation.

By successfully reducing the claims risk, the company benefits from an immediate reduction in employee benefit contributions, while at the same time providing employees with more cover at a lower cost."

Risk management

"The adoption of a proactive approach to reducing risk within an organisation, through the use of integrated employee benefits, can improve company productivity through lower levels of absenteeism, which is currently at levels of 3 to 6%, as opposed to the global norm of 1.5%, and simultaneously decrease risk for the organisation," concludes Ross.