Comment: An untapped resource? Why HR is key to the consumer protection market

Group Risk

It looks very much as though HR is the newest, and possibly most important, best friend to protection cover

I'm not fond of the term "human resources". It sounds too much like "natural resources", those mineral and metal products miners dig out of the earth.  I prefer "personnel" – it's people. I know I fight a losing battle here,  so HR is what it will have to be.

Whatever you call it, however, it looks very much as though HR is the newest, and possibly most important, best friends to protection cover. Why?  Simply because HR folk can be the key to unlocking potential policyholders.

Protection is now prime-time. Unum's "because everyone needs a back-up plan" spot seems to be ubiquitous across the channels. And Aviva's sponsorship of ITV drama specifically mentions protection - it's backed up with real life "drama" showing victims (and their gratitude to Aviva).

This creates the interest.  But does it turn the viewer into a policyholder? Probably not.

Consumers have a battery of normal excuses – it won't happen to me, it's too expensive, it's too complicated, and it could be "payment protection insurance". Or at least, those are the "rational" excuses.  It may be simpler.

For insurance is never a screaming need (until you are screaming to make a claim). The protection publicity turns cold consumers into warm consumers. 

But while they may think "protection" watching the ads, converting that into the top of the "must do" list is tough. Turning warm into hot is the task. 

And unless you want to spend your life bashing your head against a brick wall, look for another way into consumers' brains.

In October, I chaired a Guardian newspaper roundtable on employee benefits, sponsored by Unum. Participants included "wellness" managers and insurers, psychologists, public policy advisers – and HR professionals. The reference was wide – it could take in all sorts of employee benefits but, given the make- up of the group, discussion centred on protection insurance. 

Let's get the bad news out of the way. Group private medical insurance premiums are rising too fast for many organisations. According to one participant (roundtable rules preclude identifying which one) – blamed on GP's asking patients if they have private health so they can conserve their NHS budget.

The good news is firms are investing in wellness schemes which help towards a happy (and therefore productive and innovative) workforce as well as preventing private medical insurance costs from running away.

"Wellness" can take in preventative health measures to stop illness in the first place – something as simple as decent furniture costing hundreds can save thousands in backache absenteeism (and associated symptoms such as lower productivity and morale).

But several participants spoke of how group income protection (IP) schemes could also help. If staff know they will receive pay during long term sickness, it is another worry off their mind – another aid to a happier workforce with better outcomes. Unum's own IP product is mostly sold via group schemes. It sells a low proportion of plans to individuals.

The HR professionals told how they regarded themselves as gatekeepers. When they are convinced of the value of protection cover, then they will offer it to staff either as a universal perk (the best result for insurers and intermediaries) or as one of the menu items on a flexible benefits plan. If they don't like it, then it does not happen.

Because HR communicates benefits to staff, it can be crucial in take-up. They can arrange communications to staff, in some cases via "champions", this can be a letter or email to staff that says a leader or someone else well known to employees has taken up the benefit. If the boss uses the company gym facility, then others will follow if only because junior staff are curious to see if they can lift more weights or cycle faster. The same holds true for insurance.

The protection message has been well received by many big companies. But what of the SMEs?

Many simply do not know enough even when they have an HR function. According to one HR executive at the Unum meeting, the offer of protection cover (as part of wider wellness campaign) can play a vital role in recruitment and retention. So compare the cost of group cover against the fees outside recruitment consultants can charge if retention goes wrong – if the SME executive moves to somewhere with a comprehensive benefit package. The figures can be fascinating.

If that is not enough to convince the owners of SMEs, then here's a carrot and (after that) a stick.

Being nice to staff works. The Unum meeting heard from a research paper which showed that for every £1 in cost on flexible working, firms gained £3.30 in greater productivity. Flexible working is allowing staff to take time off – for children's hospital appointments or simply to re-adjust a day so they start early and finish early. Providing the comfort of insurance is harder to measure but it's there.

The stick is that employers have a duty of care to maintain the health and wellness of the workforce. Failing can be costly, especially in mental health cases. With one in four likely to experience some form of mental ill-health during their lifetime (let alone other illnesses), the lack of a coherent policy to manage sickness could lay employers open to legal action. The average cost of losing? £250,000.

For the SME, the temptation can be to dismiss someone with a long-term problem – a salary can mean the difference between survival and going bust. Putting the right protection policies in place can help avoid this as insurers will shoulder costs. 

A few companies go further in balancing the expense of benefits. One big London employer with an in-house gym makes the staff pay. They shell out because it is convenient and cheaper than outside facilities. And after costs are covered, the firm makes a profit.

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