Employee benefits market needs to develop risk engineering services, say experts

Employee benefits (EB) insurers must start thinking beyond pure risk transfer and begin offering more risk engineering-type services to unlock their full potential for insureds, agreed experts from across the market at Commercial Risk’s conference this week. The EB market is one of the better areas currently for corporate buyers in terms of rate increases and wider hardening. The pandemic has had a varying impact on different countries and EB markets, with rates now going up in some but down in others, said speakers during the two-day virtual employee benefit conference, sponsored by Zurich and Allianz. But by and large, they said there is enough capacity for EB risks. So, while this market is less problematic than others for insurance buyers, speakers representing risk managers, brokers and insurers agreed there is room for improvement. In particular, they stressed the need to move towards value-added risk services and data provision, rather than just insurance protection. Matt McLaughlin, global CUO of Zurich Corporate Life and Pensions, said: “We as insurers need to get away from just thinking of ourselves as risk transfer partners.” He said insurers need to focus on exactly what services employers and employees need, and build a “wider ecosystem” to deliver solutions. “Some of the added services and data component will be a key part of this,” said McLaughlin. He added that EB insurers should look at the value provided by risk engineering services in commercial insurance for inspiration. “There is already an analogy for this on the general insurance side and risk engineering. Risk engineering for employee benefits is something that we have been thinking about. This would start to say: rather than just being about risk transfer, we are really in the business of helping our customers improve the lives of their employees, and helping them to help manage some of these risks,” said McLaughlin. Simon Gilliat, head of employee benefits at Lockton International, agreed that pure risk transfer should just be a small part of the EB insurance offering. “Increasingly, we need to think about the ecosystem of insurance, data providers, data analytics, tech providers and medical networks working together to drive the kind of interventions that companies are looking for,” he said. “I totally agree that we have got to do a better job to help companies understand those risks and how to manage them,” he added. The pair were responding to Franck Baron, chairman of pan-Asian risk management association Parima, who urged the insurance market to have a serious rethink about how it helps to manage EB risks. This should involve developing risk expertise and engineering skills, he suggested. “I think we need to rethink how the employee benefits insurance markets are structured and the way they are delivering solutions,” he said, at the event supported by Brokerslink, the International Employee Benefits Association and Uniba Partners. “I want to see the market [players] significantly develop their medical expertise and bring that to clients and explain – this is how you can improve your risk. Some insurers are doing some of this but there is a need to level up the game,” added Baron, who is also group deputy director of risk management and insurance at International SOS. He stressed that a holistic approach is needed and urged the insurance industry to provide companies with better guidance and expertise to manage health risks. Giliat said value-added services provided by EB insurers have emerged during the past couple of years. “We have seen mental health support, telemedicine and financial wellbeing, and things like bereavement counselling, trauma counselling and social wellbeing. There is lots of new stuff out there,” he said. “I think some of those areas are likely to be standalone and not just add-ons to traditional insurance policies. So, I think if you go forward five or ten years, there may be emphasis on what we are now calling peripheral. Time will tell,” he added. Giliat also said EB insurers will have to offer more flexible solutions to meet demand for more flexible working patterns following the pandemic. “As an industry, we need to think about how we can deliver benefits and insurance products that meet the needs of not just those who work from home or the office, but every combination inbetween. Therefore, flexibility and choice are going to be far more important in the future,” he said.

Employee benefits market needs to develop risk engineering services, say experts

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