Employee Benefits intermediary Howden has today warned employers to think very carefully before cancelling or lapsing their Employee Benefits offerings during the coronavirus crisis.
The warning comes as many employers approach their annual Employee Benefits renewal date, and just a week after numerous businesses across the UK were forced to close-down usual operations in accordance with government instructions.
Steve Herbert, Head of Benefits Strategy at Howden Employee Benefits & Wellbeing said;
“We completely understand that employers are facing a uniquely challenging cash-flow situation at present, and that accordingly many organisations are looking to reduce costs during this very difficult period.
But we are very concerned that those employers who look to reduce some of their Employee Benefits spending for the duration of the crisis might not be fully aware of the pitfalls of doing so. In particular, we are worried that employers might inadvertently damage employee relations and productivity, whilst also weakening the benefits offering and its appeal in the longer-term too.
We would also like to highlight that, in extreme cases, employers might find that they are now self-insuring the risks previously covered by their benefits insurer.”
Howden emphasises that many Employee Benefit offerings are designed to provide valuable protection to employees and their families at times of extreme hardship, so it would be counterintuitive to remove such support options in the current period of heightened health and financial risk for the entire UK population.
Howden also suggests three crucially important factors that employers should carefully consider and understand before ceasing to provide any part of their benefits package:
- Legal duty and self-insurance risk
Employers should always check carefully before cancelling any element of their benefits package. The cover provided under schemes such as Group Life and Group Income Protection are sometimes contractual benefits, so cancelling such policies might well leave the employer effectively self-insuring significant employee risks at a time of great uncertainty.
- Breaking cover & underwriting concerns
Ceasing to provide cover under the policies listed in (1) might seem like a simple and short-term cost saving decision for the duration of the coronavirus pandemic. Yet employers might well overlook that some of their employees – and in particular their organisation’s highest earners – may have already undertaken a medical underwriting process to be insured for their full benefits under those schemes.
It follows that a break in insurance cover during the current crisis might result in the underwriting process starting again, with no guarantees that the previously provided level of benefit will be available under a new policy.
Howden also highlights that those employees already receiving medical treatment under a Group Private Medical Insurance scheme will probably have their treatment schedule interrupted, and in extreme cases might not be able to continue that treatment under a new policy in the future.
Howden is also concerned about the wider implications of a break in cover for entire schemes rather than just individual members. As a direct result of Covid19, it is possible that additional terms and/or restrictions may be imposed on certain insurance contracts going forward. Therefore, should a current scheme cease, insurers may not necessarily be willing to offer the same terms, including scope of cover, on re-application for a new scheme in the future.
- Valuable additional services
Finally, and certainly not least, it is important to highlight that employers and their employees also often have access to a range of valuable support services provided alongside the benefits mentioned earlier.
Some of the more popular and widely used free tools include remote-GP appointments, Employee Assistance Plans, Mental Health support, and a range of counselling lines and web-based applications. These very useful features are usually accessible remotely through phones, smartphones, and computers.
These services offer valuable additional support to workers at any time, but take on a new and greater importance during the current crisis given the number of employees who are now working remotely and isolated from the everyday support-structure of their co-workers and colleagues.
“Howden believe that cancelling any benefit could well be a short-term decision that employers and employees might later deeply regret.
Aside from all the issues already mentioned, we would like to point out the potential damage that such a decision could have on worker morale, employee engagement, and ultimately company productivity too. UK employers will need to bounce-back quickly once the crisis has ended, so few organisations will want to damage these really important measures.
Far from reducing the benefits on offer, we would suggest that employers need to better promote their existing offerings to provide as much support as possible to workers and their families at this very challenging time.”