How Employers Can Expand Their Employee Insurance Package
A car insurance policy for employees or simply an option to cover parents and children over basic coverage would go a long way to providing affordable employee care. And since employers are wholesale buyers, the premium cost will be low.
For companies, offering employees collective health, personal accident and temporary accident insurance is common practice. The company bears the costs and all eligible employees are covered from the day they join. This insurance is specified in the letters of offer and sometimes counted as part of the total remuneration. While all is well, employers need to do more.
They need to think deeply about the risks employees face and how they can mitigate those risks. Before business leaders panic about the costs involved, let me reassure them that this doesn’t have to be a cost to the business, but can result in significant financial savings for employees.
Read also : How to optimize the premium for personal health insurance when there is an employer-sponsored plan
A one-size-fits-all approach doesn’t always work
Staff have very different risks and insurance requirements and companies cannot adopt a one-size-fits-all approach. Some employees have dependent relatives. Some have spouses with sufficient insurance coverage. Some are married with children, others are married but childless or single. Some own cars while others use public transport. The way to meet these diverse requirements is to offer a bouquet of optional coverages that employees select according to their specific needs and pay for themselves, possibly through payroll.
A company is well placed to purchase insurance on behalf of its employees because it can buy in bulk and leverage its current relationship with a broker or insurer to buy profitably. In most cases, individuals will never be able to buy the insurance that businesses can buy.
There are three types of voluntary insurance companies can consider: (a) group health insurance for parents and extended family, (b) enhancements to basic group health insurance (c) other insurance, such as automobile, personal accident and OPD coverage.
Group health insurance for parents is the most sought after, and for good reason. Seniors struggle to purchase individual insurance due to chronic illnesses. Therefore, the loading and premium decline rates for senior health insurance is high. In addition, many seniors find it difficult to coordinate necessary medical tests. Once insurance is purchased, claim rejection rates are relatively high due to pre-existing conditions. The group insurance that companies buy for parents answers these questions. Medical tests are waived and pre-existing conditions covered immediately.
Read also : How much health insurance do you need?
Insurance for parents
Several companies wish to offer parental insurance to employees on a voluntary basis. Employees are generally expected to pay for their parents’ insurance, possibly with a limited subsidy from the employer. Good parental cover can cost around Rs 25,000 per life per year. This can be similar in price to individual insurance but is much more efficient and usable.
To buy parental covers, you need to work with experienced brokers. There are only a handful of insurers that will issue parental insurance because claims are high. Employees whose parents are not in good health are the most likely to purchase these coverages. This results in anti-selection. A good intermediary tackles anti-selection by guaranteeing a high registration rate. The intermediary will clearly communicate the value proposition to staff.
The second type of voluntary coverage is the flexibility to improve the core group health insurance offered by the employer. This improvement can be in the sum assured or in the coverage of the immediate family in addition to the single employee. This concept has not been sufficiently explored. Most companies fix benefits for employees and don’t let any possibility of customization. They should authorize changes to basic coverage and charge employees for the cost of these changes.
For example, if a company has a standard cover of Rs 3 lakh, it can allow employees to increase it to Rs 5 lakh on payment of a supplement. Or, if only one employee is insured, they could consider adding a spouse and children, at a cost.
Read also : Why the Claims Experience Differs Between Individual and Group Health Plans
Not only health, but also your car and home
Finally, most employees need much more insurance than just health coverage. They will buy this insurance personally and may not get the best deals or get the best insurance. A good employer can solve this problem by offering a package of organized staff insurance on excellent terms.
Consider car insurance. The employer could pre-negotiate the best discounts and give employees access to a portal where they can easily renew their auto insurance, on better terms than they would get individually.
Employers can also set up group retail products for employees. Examples include personal accidents, hospital money and OPD insurance. In personal accident insurance, the company can negotiate coverage of Rs 15 lakh for Rs 500 while the employee would pay three times as much on their own. New-age insurance, such as cyber liability coverage, can also be sold on these platforms.
Voluntary benefits need not always be insurance-based. A good company will encourage its employees to undergo annual health checks. The price advantage here is also material. A full diagnostic panel which costs Rs 5,000 in a major hospital can be done for Rs 1,500 if negotiated by the company. With such a price difference, employees willing to be tested will increase.
Companies should comprehensively review employee risks and insurance requirements. Certain coverages such as employee health and term insurance are essential. But employees should also have the ability to adjust their basic insurance and cover other dependents. Good companies will then use their product knowledge and negotiating skills to help employees purchase other medical insurance and services. This will cost the company nothing, but will result in significant employee well-being and an incomparable employee proposition. And undoubtedly lead to better employee retention and retention.
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