How employers can leverage non-life insurance solutions to attract talent

Carl Moodley, Chief Information Officer at Genric Insurance Company

Traditional employee benefits packages, centered around comprehensive medical scheme benefits and pension funds, have long been the gold standard for corporate employee benefits. However, these conventional offerings often prove financially prohibitive for smaller businesses and even less accessible to lower-income employees.

This is where non-life (short-term) insurance solutions can play a crucial role. By strategically leveraging products like health insurance, emergency evacuation insurance, group personal accident cover, funeral insurance and the like, SMEs are discovering that they can create compelling, affordable employee benefits packages that protect their employees and helps attract and retain talent.

The traditional benefits dilemma

Medical schemes and pension funds remain cornerstone benefits in the corporate world, and for good reason. These comprehensive packages provide substantial long-term security and healthcare coverage. However, they come with significant barriers not only for SMEs, but for employees too:

• Cost barriers: A medical scheme benefit can consume up to 20% of an employee's salary, making them unaffordable for many lower-income workers. For small businesses operating on thin margins, subsidising these costs by 50% for multiple employees can strain resources beyond capacity.

• Complexity and administration: Managing traditional benefits requires substantial administrative overhead, from compliance requirements to ongoing management. SMEs often lack dedicated HR departments to handle these complexities effectively.

• One-size-fits-all limitations: Traditional benefit packages may not address the specific needs of diverse workforces, particularly younger employees who prioritise different types of coverage or flexibility.

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The non-life insurance advantage

Non-life insurance solutions offer SMEs an alternative that addresses the cost and administrative challenges of providing employee benefits, while providing meaningful and tangible value to employees. Some of these solutions include:

Health insurance

Millions of South Africans simply cannot afford the high cost of medical scheme membership, while many others are finding it more challenging to maintain their medical scheme benefits. Rapidly escalating costs of healthcare are also challenging the traditional employer-sponsored medical scheme membership model - even with subsidisation by employers, many employees can no longer afford their medical scheme contributions.

Health insurance is an affordable alternative providing a range of cover options from basic primary care only options for your day-to-day needs, hospital only options, accident and emergency care, as well as more comprehensive options combining both day-to-day and hospital benefits. (It’s important to note that health insurance products are not medical schemes and the cover is not the same as a medical scheme benefit, nor are they a substitute.)

Where health insurance is particularly enjoying strong uptake in the context of employee benefits is in the primary healthcare space – providing for what is known as day-to-day healthcare such as doctor’s visits, acute medication, basic dentistry, optometry, radiology and health screenings.

Consider the scenario where an employee takes an entire day off work simply to see a doctor at a public facility or clinic only to be turned away because a healthcare practitioner is over-subscribed or medicine isn’t available. For a person living with a chronic condition such as diabetes, hypertension, HIV and so on, the challenges are exacerbated and repeated every single month.

With an affordable primary health insurance plan, these same employees have access to a designated private healthcare provider, at a network facility closest to them, on an appointment basis, paid for by their health insurer, and can be sorted within a few short hours from travel to consultation and filling of the prescription.

From an employer’s perspective, a good primary health insurance plan for employees is a solid investment against unplanned health emergencies that can have a significant impact on productivity, staff absenteeism and especially, their employees’ financial well-being.

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Gap cover

For many families, retaining their medical scheme membership will often involve financial trade-offs, having to redirect other essential household expenditure to foot the bill, and in many instances, they may have to buy-down on their level of cover to a core hospital plan, increasing the likelihood of tariff shortfalls that they will have to self-fund.

Where employees are buying down on their existing medical scheme benefits to ‘core’ plans due to financial distress, consider offering gap cover as an additional employee benefit.

Gap cover insurance protects against potential medical scheme financial shortfalls on specialist and in-hospital treatment – these are not unwarranted concerns as recent mega claims paid by Sirago Underwriting Managers show massive shortfalls upwards of R40,000 not covered by the medical scheme. Without gap cover, your employee would have to pay for this from their own pocket, and very few people have this kind of money available.

Group personal accident cover

Group personal accident insurance is a valuable employee benefit that provides financial protection to workers and their families in the event of accidental injury or death that occurs anywhere, anytime - not just during work hours.

This comprehensive coverage typically includes benefits such as lump-sum payments for accidental death, permanent disability compensation, medical expense reimbursements, and sometimes temporary disability income replacement.

It's particularly attractive to employees because the protection follows them 24/7, whether they're at work, home, or traveling, and the premiums are typically much lower when purchased as a group policy compared to individual coverage.

For employers, this benefit helps attract and retain talent, can improve employee satisfaction and loyalty, and is often tax-deductible as a business expense, making it a cost-effective way to enhance the overall value of the compensation package without significant financial burden.

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Building compelling benefits packages

The key to leveraging non-life insurance solutions in the employee benefits space lies in customisation to the needs of your employees. Consider a small print shop with 10 employees. Instead of struggling to afford a comprehensive medical scheme that might cost R4 000 per employee monthly, they could structure a benefit package including:

• Health insurance with benefits including in-hospital, casualty, accident, primary care and chronic medicine. If the employee does not need benefits like maternity for example, structure the cover, and the cost accordingly.
  
• Offer gap cover for employees who have medical scheme benefits.
  
• Consider other voluntary additional coverage options such as group personal accident and so on, as per the needs of your employees.

The talent attraction factor

Non-life insurance solutions represent more than just a cost-effective alternative to traditional benefits. They offer SMEs the flexibility to compete for talent while maintaining financial sustainability.

By harnessing non-life insurance solutions, they can build employee benefits packages that attract talent, demonstrate care for employee welfare, and position their companies as employers of choice.

In an era where talent is the ultimate competitive advantage, SMEs can no longer afford to view traditional employee benefits as a luxury reserved for large corporates. Non-life insurance solutions make attractive benefit packages accessible to businesses of all sizes.