Corporate Group Insurance Update – The Impact of COVID-19

Since the arrival of COVID-19 on the shores of Australia we have seen many businesses impacted including our clients and insurers. Having an employee insurance program is a great way to stand out from your competitors. As we head in to the next 12 months and beyond, many companies will review their employee insurance benefits to ensure the value of the program outweighs the cost. Through this time, Certe Wealth Protection are here to advise our corporate clients of changes that become prevalent in the group insurance industry. We approached three corporate group insurers and addressed a series of questions about how COVID-19 may affect policies moving forward:

What impact will the current state of the world have on pricing within the next 6 to 12 months?

Corporate insurance policies generally have a 3-year rate guarantee; therefore insurers will continue to honour the pricing until expiration. Polices re-rating in 2020, are expected to have shorter rate guarantees (2 years, instead of 3 years), until the COVID-19 pandemic is resolved.

What impact will the current state of the world have on pricing over the longer term? What do you see being the driving factors?

The current COVID-19 data suggests deaths predominately occur above the insured age-range (16-70) and the illness duration not exceeding the waiting periods on TPD and Salary Continuance. Therefore, insurers are not expecting this virus to have a direct impact on pricing over the long term.

However, due to the impact of COVID-19 (e.g., isolation, self-quarantine, work-from-home, job security and financial stresses), insurers expect to see an increase in mental illness claims, most likely on salary continuance policies. Mental health claims have been increasing sharply over the last couple of years, resulting in pricing increases. Events like COVID-19 have the potential to accelerate claims and increase prices even further.

 Is COVID-19 making insurers consider any product or definition changes?

At this stage we are not aware of any insurers looking to make changes to their products or definitions. However, as this situation develops we may see changes due to insurers adapting and evolving. We continue to monitor closely, reporting any changes to our corporate clients.

How has underwriting changed?

Members of corporate group policies are still eligible to be underwritten, with insurers’ underwriting philosophies remaining the same. Reinsurers are taking a more conservative approach with additional questions around travel, occupation (e.g. front-line workers), and economic impacts (e.g. reduction of hours and/or income) being asked.

Are insurers accepting new business?

Yes, all insurers are accepting new business, while continuing to focus support on their existing clients during this period. If we believe your existing insurer is not competitive and/or commercial with their pricing, we will endeavour to find you a better solution.

What else can the insurers do to support you during this time

Each of the insurers are doing slightly different things, so it is important to contact us directly to see what your company’s insurer can offer. As a general guide, we have observed insurers offering the following assistance:

·  Should your company be suffering from cash flow issues, there are a number of options we can look at to resolve this issue

·  Employees who have been stood down under the Fair Work Act, some insurers will consider employees who have been stood down to be on leave without pay, as long as they meet the usual claims conditions (stood down being not made redundant and retaining employment contract)

·   Working with advisers to maintain rates where the membership changes by more than 25%

What can Certe Wealth Protection do for you?

We will be your greatest advocate in obtaining and retaining sustainable and valuable employee insurance programs. Importantly, should any of your employees need to claim on their benefits, our dedicated claims team will ensure they receive professional and sensitive attention. More than ever it is important for companies to invest in the mental health and wellbeing of their staff. Many employees will be mindful of the additional benefits their employer provides, such as group insurances arrangements. Such benefits are considered very favourably, particularly in times of stress and restricted household income.

Certe Wealth Protection will be making an announcement in the coming weeks about a new and exciting app designed around improving mental wellbeing for our corporates and their employees.

Should you have any questions about your employee insurance programs please contact Certe Wealth Protection:

Owen Korn (Head of Corporate Insurance Benefits)

owen.korn@certewp.com.au or 0422 978 923

Jeremy Boller (Principal Adviser & Founder)

jeremy.boller@certewp.com.au or 0412 418 252

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