January 2010

By Dr. Rajeshree ‘Gina’ Parekh, Regional Health & Benefits Practice Leader, Asia Pacific

Across Asia Pacific, an increasing number of clients want to know where they stand in the area of benefits provision. Are they buying enough? How do their programs compare as against their competitors? Are they paying the "correct" price? Are their losses out of line?

When faced with such challenges, the availability of current and reliable market data can become a powerful tool to make informed decisions on how best to structure benefit programs at the most appropriate cost. It can furnish you with points of comparison that tell you what's happening with other organizations' insurance programs. With credible data, you can identify strengths and areas for improvement, justify investments needed to drive costs down, and prove the return on investment (ROI) in your efforts.

Benefits data for benchmarking is difficult to find within this market. It is important to look for a good source and a sound methodology when evaluating quality of data. Data must be compared against appropriate peers based on size, industry and geographic location. Otherwise, conclusions made and action steps initiated will be inappropriate and off-the-mark.

Some important points to remember when reading a Benchmark report

• Remember that benchmarks are not the be-all and end-all. Benchmarking is just one tool and a program must be viewed holistically before implanting change.
• Be sure the comparator group is relevant to your organization. While most sources of data are strictly confidential, some companies will publish participant lists. Overall data is useful to understand trends but size specific and industry-specific data is essential. For example, do not use data from Fortune 100 companies if you are a smaller firm.
• Look at the time of data collection. In a dynamic market like Asia, premium and benefit trends change rapidly; hence, an annual evaluation of trends is essential.
• Use the expertise of a consultant to help you interpret results.

Aon Consulting's recent study, Regional Benefit Trends 2009, comprehensively captures the benefits practices of countries across the Asia Pacific region. This study provides employers with an objective overview of current insured benefit schemes.

The study collates responses from 10 countries and 1,246 organizations in the region representing over 791,000 employees. Data collection templates were standardized and inputs were done by benefit consultants in order to avoid variation in understanding of self-reported data. Adequate representation from common industries and size of organizations was ensured in order to have statistically significant analysis.

Common insurance programs were analyzed within each country and all data was presented based on size (small, medium and large) and sector. These results were further aggregated into a regional report, the findings of which are highlighted here.

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Group Profile

Industry representation

All participating companies were grouped in to five main industry segments:

• Highest representation was seen within the Professional, Scientific and Technical Services segment, with a total of 424 companies, constituting 34% of total group.
• Lowest representation was seen within the Administration & Other Services segment with a total of 133 companies, constituting 11% of the total group.
• Largest representation in terms of group size is medium-size companies at 584, constituting 47% of the total group.
• Lowest representation in terms of group size is Large size companies at 284 constituting 23% of the total group
• Total number of employees participating in the regional survey was 791,067 with the highest number of employees in Thailand (194,773) and the lowest in Malaysia (18,723).
• Average number of employees per country was 124, with smallest number in Japan at 54 and largest in Hong Kong at 201.
• Highest number of employees was seen within the Manufacturing segment with a total of 242,849 employees, constituting 31% of the total group.
• Lowest number of employees was within the Administration & Other Services segment with a total of 59,593 employees, constituting 7% of the total group.
• Average group size for Large companies was 2,387 employees, 179 for Medium and 23 for Small companies

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Insurance programs

Group Life Benefits

• 75% of the overall companies offered this benefit (936 companies out of a sample of 1,246 companies).
• Highest prevalence of 92% in Australia and lowest of 28% in India.
• Sector wise, highest prevalence in Professional, Scientific and Technical Services segment at 77%; lowest within Manufacturing at 72%.
• Size wise, highest prevalence among Large companies at 85% and lowest for Small companies at 71%.
• Multiple of salary is more popular as the basis of coverage with 63% of companies preferring that over flat sum insured.

Group Personal Accident

• 78% of the overall companies offered this benefit (975 companies out of a sample of 1,246 companies).
• Highest prevalence of 99% in Taiwan and the lowest of 57% in Japan and HK.
• Sector wise, highest prevalence in Trade segment at 82% and the lowest within Professional, Scientific and Technical Services segment at 76%.
• Size wise, highest prevalence among Large companies at 80% and the lowest for Medium companies at 77%.
• Multiple of salary is more popular for basis of coverage with 60% of companies preferring that over flat sum insured.

Disability

Group Medical

• 86% of the overall companies offered Inpatient medical benefits (1,075 out of 1,246). The highest prevalence with 100% was in India and the lowest with 26% was in Japan.
  • Sector wise, the highest prevalence was in Trade segment at 90% and the lowest was within Professional, Scientific and Technical Services segment at 83%
  • Size wise, the highest prevalence was among medium-sized companies at 88% and the lowest was for Small companies at 82%.
• 52% of the companies overall offered insured Outpatient medical benefits (651 out of 1,246). The highest prevalence of 93% was in HK and the lowest of 0% was in Australia.
  • Sector wise, the highest prevalence was in Real Estate, Construction, Transport & Natural Resources segment at 63% and the lowest was in the Trade segment at 44%.
  • Size wise, the highest prevalence was among medium-sized companies at 57% and the lowest was for Small companies at 43%.

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Conclusion

Aon's survey underscores the need for organizations to accurately and consistently benchmark their benefit menu against the market and their peers.

The overwhelming challenge is to ensure that benefit investment delivers an optimal return per dollar spent. This requires close attention to which benefit works and which does not. Companies need to consider whether to offer a similar menu to all employees or provide more cafeteria-type offerings to suite differences in an organization's varying workforce profile.

How to select the group benefits provider, make comparisons among insurers, and narrow down the selection to the best provider are also issues that will keep HR professionals on their toes. Once the selection has been made, educating employees on the worth of the benefits can help ensure the value is fully appreciated and the benefit cost is optimized.

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Contact

For more information about Aon Consulting's capabilities and experience in health & benefits, please contact Dr Rajeshree 'Gina' Parekh, Regional Practice Leader, Health & Benefits, Asia Pacific, at rajeshree_parekh@aon-asia.com.

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