Price-only focus undermines real value of group disability insurance

By Janice Roberts

Elna Van Wyk, Head of Underwriting and Disability Management,
Momentum Corporate

By: Elna Van Wyk, Head of Underwriting and Disability Management, Momentum Corporate

Group disability insurance in South Africa is highly commoditised. When purchasing group disability insurance, decisions are largely driven by price in many cases. Offering group disability insurance to employees costs businesses money, but the cost of disability in the workplace is even higher.

While premiums for this highly-valued employee benefit have increased over the years, in order to unlock the real value of group disability benefits, employers and their financial advisers need to look beyond price. A price-only focus undermines the real value of group disability insurance.

Over the last few years, many claimants tend to stay on disability longer, choosing the relative security of a generous disability benefit over what they perceive as a less secure return to work in a stagnating economy. More claims of longer duration inevitably result in higher premiums for employers.

This is where the financial adviser’s role is pivotal. Financial advisers are encouraged to partner with a leading employee benefits provider with a holistic approach to disability in the workplace. This will enable them to offer a ‘best of advice’ solution to their clients to unlock the real value of group disability insurance and reduce the cost of disability in the workplace over the long-term.

Some of the key conversations financial advisers should have with their clients include:

  • the changing nature of disabilities; and
  • the role that prevention, early detection, rehabilitation and reskilling play in reducing the direct and indirect costs of disability.

Non-communicable diseases, better known as chronic diseases of lifestyle, are playing an increasingly more significant role in disability claims. This is confirmed by a report from the World Health Organisation and reflected in Momentum Corporate’s claims statistics over the last few years. Intensive engagement with disability claimants has given Momentum valuable insights into employees’ needs through the various stages of disability.

Given the increasing impact of lifestyle choices on disability, engagement programmes that encourage healthy lifestyles are an essential preventative building block to encourage people to lead healthy lifestyles and take more precaution. These programmes help to prevent the onset of chronic illnesses, which in turn reduces the risk of a lifestyle related disability.

Early detection of health risks and timeous management also helps to reduce the severity and impact of the disability. For example, health assessments at the workplace or occupational health clinics can help identify individuals with serious health risks.

Rehabilitation is also key in minimising the negative impact on the employer’s bottom-line. Insurers and employers need to work together to aid rehabilitation, reskill if necessary, and facilitate recovery. This paves the way for a successful return to work and reduces the employer’s recruitment and skills replacement costs.

A more holistic approach to disability management focuses on the employee’s overall financial wellness that encourages choices which improve physical and financial health and reduce the risk of disability.

Financial advisers and their clients should consider partnering with a leading employee benefits provider for sustainable solutions that incorporates appropriate pricing and a holistic benefit structure that adds value to reduce the cost of disability for employers.

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