By Vusi Maswili, director at ASI Financial Services

Employers seeking to manage the costs of their group risk cover would do well to actively encourage their employees to have the COVID-19 vaccine as soon as possible, within Government’s structured rollout programme.

As an independent financial services advisory, we have seen the group risk and personal insurance providers we work with increase premiums significantly in the last while, as a direct result of the significantly higher mortality rate – and claims rate – caused by the COVID-19 pandemic.

All insurers are bound to conduct ‘own risk and solvency assessments’ (ORSA) annually, which sees them gathering the data they need to anticipate, understand, and manage potential risks, and in turn to implement any controls necessary to protect their business strategy.

Risks assessed in the ORSA include diverse items, which during the current pandemic, could vary between operational risks due to more team members working remotely to an increase in death claims, or even an increase in unpaid premiums due to the economic impact of pandemic-associated lockdowns.

Insurers are also impacted by factors in the market generally, such as falling equity markets and interest rates that could put pressure on their balance sheets.

While many insurers are implementing new models and shifting their reliance away from traditional channels, we’ve seen many take the difficult decision to implement increases in their group risk premiums.

Some increases have been around the 20-30% mark, but some insurers have implemented increases as high as 150%, in an effort to mitigate the impact of COVID-19 related claims already made, and those that are still likely.

However, going forward, as part of their ongoing ORSA process, group risk insurers are likely to assess what percentage of their clients’ workforces have had the COVID-19 vaccination. Those that have already had the virus are deemed to be high risk as a result of ‘long COVID’, but those that have not had the virus or the vaccination are seen as high risk.

If an employee group has a high proportion of members that are seen to be high risk, the insurer is likely to implement higher premium increases, and this will be even more likely if employees are in high risk demographics, such as those over the age of 50. This will be even more true if most of those older than 50 are higher earners – as they are likely to be – as a claim from the insurer would result in greater cost to them.

Those that have had the vaccination are deemed to be lower risk candidates – but with group risk policy premiums levying a single rate for lives covered, those organisations whose populations are not vaccinated are likely to be expected to pay a higher premium.

In companies where cost-to-company packages are the norm, this could severely impact employees’ net salaries at the end of the month.

This is just one proof point of how companies need to have a clear strategy to demonstrate their care for their employees, by offering access to benefits such as retirement planning, group risk, wellness, and health.  In the current climate, part of that demonstration of care is encouraging as many people as possible to sign up for the vaccination, and to have it done as soon as Government’s rollout programme makes it possible.

It’s the smart thing to do for your people, and for your business – and for your country too.