What is Group Protection?
Group Protection insurance can be taken out by employers to provide protection for their employees against the financial impact of long-term absence or injury, critical illness or death. It’s not compulsory but many companies choose to have this protection in place as a recruitment and retention tool to offer reassurance to staff and their families, and support them through unexpected life events. It can also be beneficial to the company in cases where employees are given financial, emotional and practical support in their return to work after an accident or physical or mental illness.
In 2019 the UK Group Risk industry paid out a record £1.76bn in claims, demonstrating the level of support given to employees and their loved ones when they need it most. Fast forward to the unforeseen health crisis we now find ourselves in, and companies who may not have previously implemented Group Risk insurance are now considering the benefits of having this protection in place.
Founded in Chicago in 1927, Gallagher has grown to become one of the largest insurance brokerage, risk management and human capital consultant companies in the world. With significant reach internationally, the group employs over 33,000 people and its global network provides services and expertise in more than 150 countries.
Our Health & Protection team provides group risk and protection policies to businesses of all sizes across multiple industries, enabling company owners and directors to face their future with confidence. In the midst of the current global health crisis, we are currently supporting Group Protection clients with death claims related to COVID-19.
Group Protection insurance is often seen as an extension of the value an employer places on their people, and can help to improve a company’s reputation, recruitment and retention.
Group Risk pay-outs in 20192
Cover during COVID-19
If you are an employer, you can still put a Group Protection policy in place for your organisation during the COVID-19 outbreak. At this time we are only aware of 2 insurers out of about 8 that we work with who have applied a loading of around 5% to their pricing. The usual exclusions and restrictions on the policy will apply.
Frequently Asked Questions
For our clients who already have Group Protection cover in place, we have been answering a number of questions relating to COVID-19. With the help of our insurers, we have captured the most common of these here and provided general guidance in relation to these. Please contact your broker if you require advice in relation to your specific circumstances/claim.
Are furloughed employees still covered by Group Protection benefits?
Yes, being furloughed is ultimately being asked to take a leave of temporary absence; as such employees, who have been furloughed remain insured in line with the standard ‘temporary absence cover, for any other reason’ already built into your policy.
For Group Life Assurance and Group Critical Illness, cover is based on their pre-furloughed salary.
For Group Income Protection the benefit amount will be calculated in line with the policy terms and conditions and each claim will be treated on its individual merits.
What about cover for employees on reduced pay or hours?
In many cases, the above provision extends to whether employees have been asked to temporarily work part-time or take reduced pay as a result of this pandemic. For Group Life Assurance and Group Critical Illness, cover is normally fixed at the day prior to the start of absence and can continue for up to three years or as stated in your policy documentation.
For Group Income Protection, cover is normally fixed at the day the absence started and can continue for one year provided insurers are notified about the absence beforehand.
Please refer to your policy documentation for full terms and conditions.
Are employees still covered while working from home, in isolation or in quarantine?
Yes, cover remains in place in each of these situations subject to policy terms and conditions.
Are employees who die from Coronavirus covered?
Group Life schemes cover claims from all causes, with no exclusions so COVID-19 as a cause of death is covered for insured employees, in line with the scheme rules and eligibility criteria.
However, with all Group Life Assurance policies, an Event Limit applies where multiple deaths occur within one policy and as such deaths from COVID-19 could potentially be considered an ‘event’ for the purposes of defining a catastrophe. If this were the case insurers could then apply limits to claims. Currently, this factor is not a cause for concern based on data in the market today.
Event limits are scheme specific and detailed within your policy documentation.
Are employees covered if they die from Coronavirus while travelling abroad?
Yes, as mentioned above, death from all causes are covered regardless of where the death occurs.
Is Coronavirus considered a critical illness?
No. Where Coronavirus or COVID-19 is not a named critical illness in your policy then there would not be a valid reason for a critical illness claim.
If an employee is absent from work due to coronavirus for a prolonged period and is entitled to Group Income Protection benefits, would they be covered?
Yes. Group Income Protection payments are made payable provided an insured employee has been absent from work for the deferred period and meets the scheme definition of disability.
If the insured employee is self-isolating but does not have coronavirus symptoms, then they would not meet the definition of incapacity. However, if the employee had coronavirus symptoms, or is diagnosed, then the deferred period would start from the date symptoms started and the employee was not able to work.
Can we add the option to provide continued Group Life Assurance in the event of an employee being made redundant?
Yes, subject to normal policy alteration requirements with insurers.
Can we request to take a premium holiday?
There is currently at least one insurer who offers a 1-3 month deferral option, for policies covering less than 50 employees. So technically, an option may be available for a short term deferral, following which normal payments will resume including arrears.
Can we request to take a policy holiday as a result of the financial impact of Coronavirus on our business?
A policy holiday or suspension is not something that is covered; however you can cancel the policy with written notice. Once the policy is cancelled however no claims will be considered.
Please note that depending on the contracts of employment you have with employees, you may still be liable to pay a benefit if one of your employees suffers an event that would otherwise be covered by your insurance policy.
However, if you would then like your insurer to start the scheme again, within six months of cancelling, this is possible with most insurers. The previous rates and policy terms should apply unless during this time your policy was due a rate review. If a rate review would have occurred during that period, a standard rate review process and requirements would be necessary at the time you wish to insure the scheme again.
Can we have additional time to pay premium invoices if delays are caused by reduced staff or closed offices?
Insurers ask that premiums are paid in accordance within the timescales set out in the policy terms and stated on invoices. If you think it’s not possible to pay premiums by the due date please inform your broker immediately.
If employees are concerned about their health, who can they contact?
Many policies within the Group Protection market include additional support services at no extra cost, as part of the insurance policy you have taken out. These services can be utilised by employees and their families often without the need to claim and include 24/7 helplines, virtual GP services, online guidance and articles and much more.
Please contact us for any guidance and we will happily signpost you in the right direction.
Gallagher’s Health & Protection team
Our Health & Protection team provides protection, healthcare and wellbeing strategies to support the physical and emotional wellbeing of your employees, whatever the size of your organisation. We also offer Private Healthcare and Business Protection solutions.
- Group Risk Development (GriD) https://grouprisk.org.uk/2020/05/07/cover-magazine-group-risk-industry-pays-out-1-76bn-for-2019-claims