An employee auto insurance policy or just an option to cover parents and children over the basic cover would go a long way in providing affordable employee care. Since my employers are bulk buyers, the cost will be low.
For companies, offering group health insurance, personal accident insurance, and term insurance for employees is standard practice. The company bears the cost and all eligible employees are covered from the day they join. This insurance is spelled out in offer letters and sometimes counted as part of the total compensation. While it’s all in favor, employers need to do more.
They need to think deeply about the risks employees face and how they can mitigate those risks. Before company bosses panic about the cost involved, let me reassure them that this does not have to be a cost to the company, yet it can result in material financial savings for employees.
Also read: How to Improve Your Personal Health Insurance Premium When You Have an Employer-Sponsored Plan
A one-size-fits-all approach doesn’t always work
Employees face very different risks and insurance requirements and companies cannot take a one-size-fits-all approach. Some employees have dependent parents. Some have spouses who have sufficient insurance cover. Some of them are married with children, others are married but without children or not married. Some own cars while others use public transportation. The way to meet these diverse requirements is to offer a package of optional covers that employees choose based on their own needs and pay for them, possibly through payroll.
The company is in a good position to obtain insurance on behalf of employees because it can buy in bulk and leverage its existing relationships with the broker or insurance company to purchase cost-effectively. In most cases, individuals will never be able to buy the insurance that companies can buy.
There are three types of voluntary corporate insurance to consider: (a) group health insurance for parents and extended family, (b) basic group health insurance improvements, and (c) other insurance, such as auto, personal accident, and outpatient covers.
Group health insurance for fathers is the most sought after, and for good reason. Seniors struggle to purchase individual insurance due to chronic illnesses. Thus, premium loading and declining rates for seniors’ health insurance are high. Also, many seniors find it difficult to coordinate required medical exams. Once insurance is purchased, claims rejection rates are relatively high due to pre-existing conditions. Group insurance that companies buy for parents addresses these issues. Medical exams are waived and pre-existing conditions are covered immediately.
Also read: How much health insurance do you need?
Many companies offer parental insurance to employees on a voluntary basis. Employees are often expected to pay for their parents’ insurance, perhaps with some limited support by their employer. A good parental cover can cost around 25,000 rupees per life per year. This may be similar in price to individual insurance but is more effective and usable.
To purchase parental covers, you should work with experienced brokers. There are a few insurance companies that will issue parental insurance because claims are high. Employees with parents who are not in good health are more likely to purchase these wraps. This results in unselection. A good broker deals with anti-selection by ensuring high enrollment rates. The broker will clearly communicate the value proposition to the employees.
The second type of voluntary coverage is flexibility to enhance basic group health insurance offered by your employer. This boost may be in the total guaranteed or in immediate family coverage in addition to the employee only. This concept has not been sufficiently explored. Most companies fix benefits for employees and leave no room for personalization. They must allow changes to be made to the base cover and charge employees for those changes.
For example, if a company has a standard cap of Rs 3 lakh, it may allow employees to boost that to Rs 5 lakh on additional charges. Or, if he is just an insured employee, he can consider adding a spouse and children at a cost.
Also read: Why the claim experience differs between individual and group health plans
Not only health, but your car and home as well
Finally, most employees need to insure much more than just health coverage. They will buy this insurance personally and may not make the best deal or get the best insurance. A good employer can remedy this by offering employees a package of co-ordinated insurance with excellent terms.
Consider car insurance. The employer can pre-negotiate the best discounts and give employees access to a portal where they can easily renew auto insurance with better terms than they would receive individually.
Employers can also set up mass retail products for employees. Examples include personal accident, hospital cash, and outpatient insurance. In personal accident insurance, the company can negotiate a cover of Rs 15 lakh for Rs 500 while the employee pays three times himself. New age insurance, such as electronic liability cover, can also be sold on such platforms.
Voluntary benefits don’t always have to be insurance-based. A good company will encourage employees to undergo annual health checks. The price advantage here is also material. A complete diagnostic panel costing 5,000 rupees can be done in a large hospital for 1,500 rupees if negotiated by the company. With this difference in price, the number of employees willing to be tested will increase.
Companies need to comprehensively consider employee risks and their insurance requirements. Some coverages such as employee health and term insurance are necessary. But then employees should also have the flexibility to hone their basic insurance and cover other dependents. Good companies will then leverage their knowledge of the products and their ability to negotiate to help employees purchase insurance and other medical services. It will not cost the company but it will result in great employee welfare and unparalleled employee exposure. Undoubtedly, it improves employee retention and loyalty.
Also read: IRDAI’s new rules: Insurance commissions remain high, but backend incentives for agents may stop; Deepening insurance penetration