The cost of group risk cover – the life, disability and funeral cover you receive as part of your employee benefits package with your employer – is likely to rise because of Covid-19, and employers are encouraged to be flexible and accommodating with staff who are suffering from “Long Covid”.
These were two take-outs from a recent Hot Topics webinar by Alexander Forbes, which focused on group risk cover and Covid-19 in the workplace.
Belinda Sullivan, head of corporate consulting strategy at Alexander Forbes, said the pandemic had placed a greater focus on the importance of employee benefits, which have two components: retirement savings and group risk cover. Many employees rely on these benefits, which they may not be able to afford in their personal capacity. Being a contributor to (and recipient of) these benefits is compulsory, which may make up for any lack of financial planning on the part of the employee. Further advantages include the fact that the benefits are subsidised by employers, costs are generally lower than on retail products, and on risk cover there is cross-subsidisation within the group, which means that sicker or older employees don’t pay more than younger, healthier ones, as they would for retail cover.
Sullivan said that after 500 days of lockdown, certain trends are manifesting, with both direct and indirect effects of Covid-19 becoming apparent. Four of South Africa’s largest insurers reported a rise in death claims of 50 to 60% between March 2020 and Jan 2021. Excess deaths were up to four times normal natural deaths in some areas at the peak of the second wave.
Insurers are experiencing higher claim volumes, and as a result there have been delays in settling claims, especially for funeral cover.
She said the first wave had a relatively low impact, because deaths were mostly in people older than 60, and many of these were already retired. However, the second and third waves had a more severe impact on the 50-60 age group.
The trend for funeral cover was different: there was a significant rise in claims from the beginning. This is because funeral cover caters for an employee’s extended family, which would include elderly parents.
Sullivan said there had been no significant uptick in disability cover. This may be because employees with debilitating symptoms may have succumbed to the disease before the waiting period for disability cover had ended. However, insurers are expecting disability claims to rise as the effects of Long Covid become more widespread.
Sullivan said that because of the rise in claims, insurers will likely increase their rates, which will come through in their contract renewals with employers.
Myrna Sachs, the head of health management solutions at Alexander Forbes, painted a depressing picture of the long-term damage the virus can do to the body as well as the psychological effects the pandemic and lockdowns are having on employees.
Sachs said studies are finding that up to 30% of Covid-19 patients still struggle with symptoms a year later, with persisting effects on the body’s immune system and inflammatory processes.
She said that Long Covid, as it has come to be known, is not necessarily associated with how severely patients had the disease initially. Common symptoms include ongoing respiratory issues, shortness of breath, fatigue, memory loss, mood swings, concentration problems, muscle and joint pain, inflammation of internal organs, and disturbances in smell and taste. She said the clinical picture was similar to people with auto-immune conditions, with an increase in inflammatory markers.
“A problem is that people often dismiss these lingering symptoms as non-consequential and that they will go away, but they don’t,” Sachs said.
The problem for employers is the impact on day-to-day functioning at work. If an employee can’t meet an expected level of productivity, this may affect his or her mental health. So the problem is also a psychological one, compounded by the pandemic’s impact on family and home life.
“Employees may downplay the impact on work, and don't do anything about it, so they are not treated early enough. Often, they are returning to work far too early, not giving their bodies time to recover, because they may be scared of losing their jobs.”
Sachs said employers needed to be flexible and accommodating in these circumstances, because it will affect their bottom line and will mitigate a rise in disability claims. They need to acknowledge and understand what their employees are going through, assess the functional impact of residual impairments – which will differ from job to job and person to person – and adjust the workload accordingly, perhaps with a graded return to full functioning, and with symptoms being monitored regularly. “The indirect costs of employees being sick can cost a company much more than sick leave costs,” she said.