A paradigm shift
In the October edition of the Captive Review magazine Giovanni di Meo of Allianz explains the changes in light of the Covid-19 pandemic.
by Giovanni di Meo | 4 min read
As we approach two years since the outbreak of the global pandemic, Covid-19 is still at the top of the employee benefits agenda. Recent months, however, have shown a shift in the items of focus across the industry.
Amid the initial concerns around adequacy of insurance coverage in unprecedented and unforeseeable circumstances, corporate organisations rapidly came to understand that Covid-19 would have disrupted the way they employ people in addition to taking a direct toll on the safety of employees.
Early in the pandemic, the immediate request of multinational companies was to identify and possibly waive any related exclusion of insurance coverage across all countries. Within the specific framework of each local market practice and social security system, benefits uplifts were also provided to support affected employees and their families.
There have been clear advantages for corporations that already had
multinational programmes in place, compared to the ones managing employee benefits on a local basis. In particular, the flexibility, efficiency and sustainability of captive programmes allowed corporations to step up and to ensure coverage for the insured members without delay.
In parallel, governments in most countries took appropriate actions to respond to the pandemic, either by providing and financing Covid-19 hospitalisation and vaccination or by introducing large packages to support the economy and strengthen the social protection systems. Private medical insurance coverage kicked in only in the few instances where treatments and vaccinations were not provided by the public health systems.
As social distancing rules were rolled out to mitigate the spread of the virus, medical consumption dropped significantly due to cancellation or postponement of elective care. Digital health surged as a way to safely deliver and access healthcare. According to a study recently published by McKinsey, the telehealth usage in April 2020 was 78 times higher than in February 2020, and then stabilised to 38 times higher in the following months.
With employees moving towards working from home, and home office becoming the new normal for most organisations around the world, the stress relating to managing work-life balance and being able to thrive in a new working environment is also on the rise. Mental health disorders are now the leading cause of disability across Europe.
In addition, as the pandemic unfolds, studies are showing that 50% to 80% of individuals who have had Covid-19 continue to experience lingering symptoms three months or longer after getting sick, clearly mirrored in the surge of disability claims related to the Long Covid syndrome.
The deferred period of disability coverages has initially delayed the evidence of the negative impact of mental health disorders. Moreover, self-awareness, privacy concerns, stigma and accessibility of treatments keep lingering the impact of what is likely a hidden iceberg. Following many years of debate within the industry, the pandemic was finally accelerated the adoption and development of employee assistance programmes related to the revamped duty of care and responsibility of employers. But these programmes will limit rather than prevent a surge in disability claims.
Recent studies indicate that while most of the corporations started offering employee assistance programmes since the outbreak, only one in four employer believes their programmes are effective. Although employers and their providers have promptly reacted to the newly emerged needs of their employees due to the pandemic, a deeper understanding of the way their needs will develop over time is key. For instance, most corporations keep struggling to rethink or expand paidtime-off programmes. Paid leave benefits are considered the most emotional of the benefis, but they are also one of the largest employer’s expenditure, even more than the healthcare benefits, and this is clearly delaying further actions on the matter.
Recent surveys show that over 40% of employees globally are considering to hand in their notice post-pandemic, in a search for career progression and skills development but also for better benefits. The relevance of employee benefits will again play a key role in an ever-competitive job market, where businesses contend to become the employer of choice.
Undoubtedly, captive programmes have proved to be the best-suited vehicle to change and adapt local plans whenever needed, fostering innovation in our market landscape. Thanks to the easier access to claims data and their comprehensive view on the entire workforce across multiple lines and countries, captives can provide, monitor and adapt benefits and health and wellbeing programmes, to underpin business and human capital strategies, even in these unprecedented times.