Captive Review (CR): How have employee benefits evolved in recent years to fit in more with social trends such as the growth in recognising mental health?
Jayesh Patel (JP): There are raft of social trends that have affected the provision of employee benefits, particularly in recent times. Historically, changes in benefits were almost exclusively tied to legislative and social security changes but increasingly social changes such as attitudes towards mental and physical wellness are having an impact.
Addressing mental health is now being recognised as critical to maintaining a productive workforce as related issues like stress, depression and fatigue are amongst the most common causes for workplace absence. Therefore income protection policies that were traditionally designed to provide financial assistance for absence now routinely include a considerable element of return to work support, including assistance programs targeted on mental health.
CR: What types of policies are now offered in employee benefits that weren’t before?
JP: Within life, income protection and medical policies we are seeing increased demand for transgender coverage, coverage for non-married partners and same-sex partners which again is linked to social trends and an and ever-inclusive workforce.
We are also seeing better support within EB policies for family planning globally, be it via enhanced maternity coverages or fertility support. Coverage for treatment for critical illness, particularly cancer and ancillary services around has widened significantly as this has continued to grow as a public health topic.
CR: How has this proven beneficial in the captive?
JP: Captives have actually been spearheading some of the new developments mentioned above. As bearers of own company risk, they can be utilised to provide enhanced terms and conditions that the market is not currently offering. Therefore captives can be hugely beneficial to their parent’s global employee benefit strategy it not only managing risk but supporting the development of that risk in view of emerging trends.
Whilst this is positive, captives need to be mindful that leading the market into new territories comes with risk in itself regarding accurate and sustainable pricing and should continue work in partnership with its providers and consultants to ensure these are controlled.
CR: What opportunities are there in the employee benefits space for captives now employee benefits is a growing area?
JP: There continues to be growing evidence that managing major employee benefit risk in a captive is an efficient and economic construct. Insured employee benefits, comprised of life, accident, disability and medical, is a largely predictable line of risk either through mortality or observed claims experience and therefore in conjunction with providers and consultants, captives can build lasting and viable programs.
The large bulk of employee benefit spend is still weighted towards group medical, which traditionally has not been looked upon as a desired risk for captives due to high claim utilisation rates. This is changing however given the closer role that captives are playing in actively managing medical risk in tandem with their partners.
CR: From your experience, what innovations have you seen in the employee benefits space in recent years?
JP: Technology is playing a major part and is touching all parts of the employee benefits “provision chain”; whether it be at the front end with full management of policies and claims via apps, on the insurer side with use of AI and smart underwriting techniques and with the captive the strides forward in terms of frequency and quality of reporting and analytics. It’s clear that all stakeholders in EB must now harness technological solutions to improve delivery and management of employee benefits.
Spurred on by the consumer experience, corporate customers are also demanding employee benefit providers to simplify and make more relevant the products they offer. For example, demographics in the corporate workforce are showing trends where there is often a very young and a much older strands in the overall population. Both of these cohorts have very differing needs and therefore the element of choice and customisation of benefits is being sought. Providers need to ensure they are prepared for this to keep pace with evolving customer requirements.