Pandemic reveals gaps in global employee benefits programmes

The outbreak of the COVID-19 pandemic has highlighted gaps in employee benefits programmes in many jurisdictions, particularly where social security protection is sketchy. Whilst these gaps may have been plugged hastily, a thorough audit of corporate programmes gives multinational companies the opportunity to enhance the level of cover needed to boost employee morale whilst leveraging economies of scale to keep costs down.

Many organisations do not have a centralised global approach to benefits. It is often the case that the management and procurement of benefits is handled locally. Each country has different social security regimes, regulations, and taxes and through this evolution employee benefits have become disparate.

Finding quick fixes

The coronavirus outbreak has suddenly changed the expectations and needs of employees. For medical plans, there was an immediate necessity to understand coverage for testing and treatment for COVID-19, for example. While medical insurers around the globe largely adopted measures to cover these, significant investment was required for the adoption of virtual appointments/telemedicine.

Furthermore, there has been an increase in demand for prevention measures such as webinars, educating staff on a healthy lifestyle, flu vaccinations, and fitness support such as cycle to work schemes.

With working from home becoming the new normal, employers needed to offer adequate protection and support for mental health risks such as the introduction of employee assistance programmes (EAPs), and networking opportunities through mentoring programmes and virtual team coffee breaks.

Leave entitlements have been a major issue for a number of companies. For example, days paid for COVID-19 sickness, or during quarantine, whether for own sickness or for family members, had to be dealt with. Some employees can be off with “long COVID-19 (opens a new window),” which can be seriously debilitating for significant periods of time, and it is important for employers to have benefits in place supporting affected employees financially, mentally and physically to help them recover.

The challenge for many organisations was not only to clarify what each unit provides locally but also what is available through state/social systems in order to understand the total level of cover/protection granted.

Creating a sustainable global programme

Even in markets where social security systems do not provide adequate cover, supplemental insurances such as life insurance and disability are not always provided by employers. As a result of the experience during the pandemic, many organisations started to implement a mandated minimum level of supplemental cover, especially for life insurance. To do so requires a thorough understanding of what employees are receiving and, from a protection point of view, what they are covered for in all jurisdictions.

Gathering this information has always been a challenge but the pandemic has added a sense of urgency to the matter, creating unprecedented demand for audits of benefits and leave policies around the world as organisations wanted to have the confidence that their employees are protected and cared for.

Detailed policy audits for insurance protection often revealed exclusions or limits on cover for pandemics/epidemics, making it necessary to discuss with the insurers options to remove or alter these clauses.

 Market outlook

In many markets, COVID-19 has resulted in a drop in claims within supplemental medical and accident plans, largely due to confinement and the suspension/postponement of medical treatments. For insurers, this has made the assessment of claims trends from 2020 difficult. This uncertainty along with expectations of increased utilisation in 2021 is resulting in higher than usual spikes in premium rates.

The impact of working from home is expected to result in an increase in claims arising from musculoskeletal issues, along with concerns around mental health and stress.

Financial health is another area that we expect to come more into focus as the pandemic impacts on the economy more generally and on individuals’ finances come to light. Financial education (opens a new window) can help employees feel more confident about their finances and give them the tools to better manage expenses and savings. This is not just limited to retirement pensions, but also includes short-term help such as providing wage advances and helping to refinance problem debt, which may be able to ease concerns and significantly boost mental wellbeing.

Medical inflation was already high globally before the pandemic, exceeding regular price inflation. The cost of research and development that went into COVID-19 vaccines is expected to add further costs over time, and together with the aforementioned concerns, impact premiums. It is ever more important for global employers to provide consistent adequate protection and understand the trends in each market.

Creating and adjusting a global employee benefits programme can save costs as the company can leverage economies of scale and mitigate against generally rising prices. Most commonly, a global approach can remove duplicate coverage, harmonize efforts, and leverage relationships with global and/or regional insurers.

For further information, please contact: 
Stephen James, Senior International Benefit Consultant Employee Benefits

T +44 207 933 1179 (opens a new window)