Group benefits and disability claims: addressing changes

Isaac Mudau

The last two years have been challenging on the work front for all South Africans, as businesses of all sizes were severely tested by the pandemic.

Financial uncertainties

Many were forced to close their doors permanently, and others had to downsize in employee numbers and salaries. And the battle to survive in tough economic conditions still
remains real.

Of course, business was not the only element affected by COVID-19. Not only were people losing their salaries, but they were also losing loved ones. These financial uncertainties were exacerbated for many families by the threat of a breadwinner getting seriously ill, or worse, passing away. This really brought the value of group risk cover to the fore, as for some people, group risk cover is the only disability and death cover that they have.

Group risk death claims

MetLife’s 2021 Employee Benefit Trends study found that 51% of employees believed that employers should play a greater role in the safety and protection of employees and their families. And group risk policies delivered on their promises – the Association for Savings and Investment South Africa (ASISA) revealed that the value of group risk death claims paid, increased by 139% for the period 1 April 2021 – 30 September 2021, compared to the same period in 2019, pre-COVID. Over 94 000 death claims in the group risk category were paid during the third wave of COVID-19, totalling R12,52 billion.

These group risk payouts undoubtedly saved many families, families that would not have received any money on the death of their loved ones otherwise.

However, with this sharp increase in claims, came a great deal of uncertainty about what the future would bring for the group risk sector, in terms of further deaths as a result of the pandemic – and, even
more claims.

In reaction to this increase, and in anticipation of further large payouts, many insurers increased their group risk premiums, which, for the members of a scheme, is seldom a good thing.

Ideally suited as a solution

Employers and funds are now looking out for ways to ensure that their members are still adequately covered, but at a cost that they can bear, against the backdrop of an economy under strain. And this is where efficient insurance that is designed to limit wastage, and is flexible enough to meet clients’ changing needs, can really make a difference to schemes and their members.

Members need cover that gives them the most cover when they’re younger – when they have more
pay cheques to protect – and less when they’re older. One insurer’s innovative product design, for example, can give groups up to 40% more cover for the scheme as a whole. In addition, in the event of a disability or death claim, this insurer has options available that allow the claimant to decide whether they want to take the payout as a lump-sum or as a recurring payment.

When this insurer launched its group risk cover in 2018, it of course could not have predicted an environment where group risk claims would more than double in a year, and put the financial future of many families in jeopardy. Cover that can match people’s needs provides a distinct advantage for both employers, and employees, and is ideally suited as a solution against a challenging economic backdrop.

This article was originally published on page 87 of FAnews April 2022 edition and is attributed to Isaac Mudau, BrightRock Chief Operating Officer: Funeral and Group Risk. Click here to read the original version.

 

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