What’s happening in the group insurance market?
What’s happening in the group insurance market? | Insurance Business Australia
Insurance News
What’s happening in the group insurance market?
Report delves into trends, causes of changes, and impact of claims on premiums
Insurance News
By
Roxanne Libatique
Gallagher has published its 2024 Group Insurance Industry Insights Report, which highlights the critical role of life, total and permanent disablement, and income protection insurance for Australians.
The report examines group insurance as a key element of organisational compensation and benefits strategies. It explores group-based insurance within employer-sponsored programs and outside of superannuation, detailing its components and the current state of the insurance market in Australia.
Additionally, it discusses trends affecting the Australian group insurance sector, the reasons behind significant changes, the impact of claims on premiums, and how Gallagher assists employers in navigating these challenges.
Inflation is driving up operating costs and limiting the ability to increase employee compensation.
Superannuation insurance faces scrutiny due to low member engagement.
Structural changes, new insurance types, and modifications to benefit designs are reshaping the Australian group insurance market.
Changes in superannuation legislation have led employers to consider “stand-alone” group insurance arrangements.
Enhancing employee wellbeing is a priority for organisations, potentially boosting productivity and reducing insurance claims.
Multinational clients are standardizing global benefits to improve efficiency, retain talent, and control costs.
The Australian group insurance market has undergone significant transformation over the past five years.
According to Gallagher, approximately 70% of employers offer some form of group insurance, with noticeable shifts in structure, types of insurance, and benefit designs due to evolving superannuation laws.
Superannuation trustees now face the challenge of balancing sustainability, suitability, affordability, and education to provide benefits to individuals, families, and the community.
Group insurance within superannuation
Group insurance within superannuation has been criticised, primarily due to a lack of understanding of its purpose.
Gallagher highlighted the importance of education and engagement in enhancing member wellbeing and reducing claims and premiums.
Regulatory changes have increased the need for engaged superannuation members, making employer-provided insurance, whether inside or outside superannuation, more effective due to better communication and engagement.
“Group insurance has always been a core traditional employee benefit. This is one aspect that has not changed. As someone who has experienced first-hand the devastating financial impact that major illnesses and injuries can have on families, I am firmly committed to spreading the message to employers about the importance of this valuable employee benefit,” said Matthew Kennedy, executive manager, corporate benefits, Gallagher Australia.
More employers offer life insurance as employee benefit
Gallagher’s report said employers are increasingly offering life insurance as an employee benefit, positioning themselves as attractive employers. Despite the importance of group insurance, only 31% of employers currently offer it.
Traditionally, sectors such as finance, banking, technology, and professional services have provided salary continuance benefit periods extending to age 65. However, rising claim rates and premiums have led to a shift towards shorter benefit periods, such as two- or five-year terms, and adjustments to salary coverage percentages.
Focus on sustainability, enhancing employee value proposition
The report noted that the insurance industry is focusing on sustainability and enhancing the overall employee value proposition (EVP).
By shortening benefit periods, employers can invest in other employee benefits, improving their EVP and attracting top talent.
Gallagher also recently delved into the benefits of prioritising sustainability as investors, stakeholders, business partners, employees, and consumers now prefer companies with strong sustainability practices.
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