Income protection has traditionally been used to protect staff and their families if they are off work through illness or injury. Cheryl Brenan, a director of corporate risk, argues that it now has a broader role as part of wellbeing programmes.
Being unable to work through illness or injury would place a huge financial strain on most UK families. According to MetLife’s latest “UK employee benefits trend report”, 47% of people said their top financial concern was if the main wage earner in their family could no longer work.
Yet, while income protection is a valuable benefit, it is not provided as widely as it should be by UK companies. MetLife reports that just 11% of employees are covered.
There are a couple of key reasons for the low take-up. Income protection is far more expensive than life assurance – the most commonly provided employee benefit. And because few staff ever make income protection claims, many overlook its importance.
But change is under way. For some time, income protection insurers have been embedding employee assistance programmes (EAPs) into their policies. Now, with the growing number of companies establishing corporate wellbeing programmes, there is an opportunity for income protection providers to evolve their products further by integrating health and wellbeing into their solutions.
Many companies are looking for ways to introduce corporate wellbeing programmes. Earlier this year, Punter Southall Health & Protection partnered with the Reward and Employee Benefits Association (Reba) to undertake research looking at trends in corporate wellbeing.
One-third of companies said they already have a defined wellbeing strategy – most of which were set up in the past three years. The remainder said they were in the planning stages. The report highlighted that wellbeing is no longer a “nice to have”, but a strategic priority.
Many companies see wellbeing programmes not just as a way to improve the health of their workforce, but as a tool to improve employee engagement, increase productivity, reduce staff turnover and lower sickness absence costs.
There is also the demand from staff – with more people taking their health and fitness seriously. A growth in wearable devices, such as fit bugs, is fundamentally changing how people interact with their health and fitness. Analysts forecast the global smart wearable fitness and sports devices and services market to grow at a compound annual growth rate of 25.22% and 38.35% respectively from 2016-20.
Given these trends, income protection insurers might consider extending their products into the wellbeing arena – to make the products more engaging and enable companies and employees to get more for their money.
There are many reasons why income protection is an effective vehicle for developing wellbeing services:
- Income protection insurers will benefit from a greater wellness focus, so claims (and therefore premiums) should reduce.
- The data coming out of such programmes should help to develop future initiatives that could lead to reduced claims and allow the insurer to really support employers.
- Insurers have already included EAP and vocational rehabilitation in their service proposition – this would be an extension.
- The cost of the wellbeing programme can be included in the premiums, so employers can use existing insurance budgets to fund the wellness programme.
- The buying power of insurers should drive greater value for employers and allow full quality checking on wellbeing suppliers.
Punter Southall Health & Protection has already entered this market, with the launch of Havensrock in 2015. In addition to the usual offering, income protection built in the following wellbeing benefits for all members:
- A wearable fitness device, so employees could track exercise and sleep, as well as allowing for corporate fitness challenges.
- A mini workplace health screen providing key health data.
- An interactive wellbeing portal allowing screening and activity data to be assessed and useful health tips provided.
With a recent report from the TUC highlighting that one in eight of us will have to retire due to ill health, employers clearly need to put wellbeing further up the agenda as well as provide some financial protection. For these reasons, traditional income protection solutions must now evolve.
Cheryl Brenan is director of corporate risk at Punter Southall Health & Protection.