Health & Benefits
Occupational health schemes and fringe benefits, or H&B (Health & Benefits) for short, are becoming increasingly important for the successful recruitment and retention of high-performance employees. Different insurance lines and services are combined to provide guidance in the field of human resources risks. In addition to the special segment of international people mobility (IPM), other subjects include employee health and income maintenance through insurance coverage in the event of invalidity or death. Moreover, communication solutions for insurance and fringe benefits and online platforms relating to the management and harmonisation of employers' contributions are becoming increasingly important for the companies concerned.
Market Situation
According to a recent Aon Health Survey, 67 per cent of all companies in Germany agreed that talent management - attracting and retaining talent - was a crucial challenge for their HR departments. At 67 per cent,this figure puts Germany slightly above average in Europe, the Middle East and Africa.1
The time needed to fill vacancies (vacancy time) has been rising constantly over the past 10 years and exceeded an average of 100 days in 2017 for the first time. In the technical professions and in the nursing and health professions, these times are sometimes much higher - 171 days for nursing care and 148 days in software engineering. In Germany, vacancy times vary, depending on the region in question.2 Fringe benefits and their communication to employees are gaining increasing importance as key features that set them apart from their competitors. The companies polled in the Aon Health Survey are planning to provide budgets for their initiatives in this segment, clearly communicate them and monitor their success.3
Source: Aon EMEA Health Survey 2018
Outlook
The range of group policies for survivors' pensions and invalidity insurance has been extended since last year. As a result of the increasing number of players in the market, insurers are experiencing price and innovation pressures. Compared with conventional solutions, the new products are characterised by moderate prices, simple management and low access barriers (medical check). On the other hand, group insurance does not provide for continued coverage once an employee has left the company.
Company health insurance continues to grow slightly. However, with little more than 600,000 insured employees, its market penetration is still low while its market potential remains high.4 Since company health insurance is competing for budgets with various other measures, the lack of state subsidies - especially in comparison with company pensions - has to be regarded as one of the major impediments to its success.
It remains to be seen how far companies will respond to the legal changes of the German Act to Improve Occupational Pensions (Betriebsrentenstärkungsgesetz, BRSG). Employees in Germany have the legal right to request that their employer convert part of their remuneration into a company pension. The main purpose of the BRSG is to promote company pension schemes for low-income earners and to encourage small and medium-sized companies to use such schemes.
Market Trends
With more providers of personal insurance and company health insurance policies entering the stage, the market remains dynamic. This translates into increasingly improved insurance conditions and the provision of annex services. One example is "Care Management": its goal is to support employees at an early stage of sickness, to avoid the chronification of diseases and reduce the amount of working time lost by companies due to absence. Company health insurers are also offering additional services more frequently. These services partly overlap with occupational health management and employee assistance programmes (EAPs). This trend means that it will increasingly become a challenge to co-ordinate these employee services while avoiding overlaps and clearly communicating their content and added value to staff (and applicants).
Special Market: International People Mobility (IPM)
Employee health and safety is also playing an ever important role at international level. While, on the one hand, corporate human resources and insurance departments are being encouraged to implement cost-saving strategies, on the other, they have to present themselves as attractive employers in order to retain talent in the long run and simultaneously fulfil their duty of care.
Market Situation
With regard to global employee mobility, it is noticeable that the number of employees travelling on business decreased by some 1.5 per cent in 2017, while the number of business trips increased from 183.4 million to 187.5 million in the same year. Companies with more than 1,500 employees are sending 44 per cent of their staff on business trips, compared with only 34 per cent in 2013.5
Number of business trips …
… 2013 to 2017
Source: VDR-Geschäftsreisenanalyse
In the case of employee secondment, the focus is increasingly turning to the millennial generation for whom a temporary assignment abroad is an important step in their career plans.6 As an alternative to longer-term assignments, and with an eye to cost savings, a growing number of companies are locating their staff abroad. This helps to avoid the high structural costs that are usually inccured for an initially limited stay abroad. In this context, it is often agreed with the employer that the German employment contract be converted into a local one, simultaneously terminating the employment relationship in Germany.
Cost savings in the international health insurance segment are being hampered by the sharp increase in inflation for medicines which is rising at an above-average rate.
| 2016 | 2017 | |||
|---|---|---|---|---|
| Region | Annual general inflation rate | Annual medical trend rates (gross) | Annual general inflation rate | Annual medical trend rates (gross) |
| Worldwide | 2.9 % | 8.1 % | 2.8 % | 8.2 % |
| North America | 1.5 % | 6.0 % | 1.6 % | 6.3 % |
| Latin America & the Caribbean | 6.4 % | 13.6 % | 6.0 % | 14.2 % |
| Europe | 1.6 % | 5.9 % | 1.6 % | 5.7 % |
| Middle East & Africa | 6.3 % | 11.6 % | 6.7 % | 14.3 % |
| Asia | 3.2 % | 9.4 % | 2.9 % | 8.9 % |
Source: Aon Hewitt, Global Medical Trend Rates, 2018
A survey has revealed that in the light of global geopolitical risks, 49 per cent of all companies polled have adapted their mobility programmes. The focus of this re-alignment lies in the implementation of safety programmes. There is also a trend towards apps, personalised portals and other IT support tools.7
Outlook
The trend for corporate clients to demand more from brokers and insurers is continuing in the international health insurance segment. In addition to comprehensive health insurance cover, today's customers expect fully digitised processes, additional assistance services and international networks. The trend away from national insurers with international branches and towards international "one-stop shop" solutions is continuing unabated.
Market Trends
Compliance was an important issue in 2018. Various countries have strengthened their insurance-related statutory provisions. The main changes can be seen in Switzerland and Austria. Insurers and specialised brokers alike are improving their expertise in these fields. It is no longer enough just to provide pure insurance solutions; they need to be combined with a perfect concept offering advice and a support service. Furthermore, there is a clear trend towards fringe benefits such as employee assistance programmes, travel safety services and all-inclusive solutions in the health insurance line.
Special Market: Group Personal Accident Insurance
Premiums for group personal accident insurance will remain stable for many companies. However, the trend in recent years of rising premiums for companies that have already submitted major claims is set to continue. Increasingly, insurers are preparing profit estimates for their current policies by as early as June, in order to secure a continuous overview of the efficiency of these policies.
Market Situation
By the end of 2018, Germans are likely to have spent EUR 6.6bn on their accident insurance policies, meaning that revenues will have increased by 1.5 per cent compared with the previous year. In 2017, there was a similar increase in revenues, compared with the previous year. Insurers' claims expenses totalling some EUR 3.4bn will remain at the same level by late 2018; as a result, their loss ratio will improve by approximately 1 per cent to 78 per cent via-à-vis the previous year. Consequently, the accident insurance line remains highly profitable for insurers.
is expected to be
financial year
Outlook
Premiums for accident insurance will remain stable for many companies. Otherwise, it is true to say that companies that have already submitted claims leading to high loss ratios will have to expect premium increases from their insurers. In particular where the combined ratio clearly exceeds 90 per cent, insurers will either charge higher premiums or reduce coverage.
On the other hand, insurers are becoming more flexible with regard to the way their policies are structured. There is an increasing readiness to refrain from premium increases or to increase premiums more slowly, provided the companies waive specific provisions of their insurance policies or accept higher deductibles. A downgrade of the degrees of invalidity agreed for employees in the event of a permanent impairment (invalidity) could also have a positive effect on premiums.
Claims management will undergo the most profound changes. Accident claims management will be particularly complex as a consequence of the European General Data Protection Regulation (EU-GDPR) in force since 25th May 2018. Extended rights of data subjects and additional duties of data processors will make claims management more difficult. Without the insured person's explicit written consent, it will not be possible for insurers, employers or brokers to collect or process personal data. Under the new regulation (Article 12 GDPR), employers are subject to a more stringent obligation to inform their insured employees. The person concerned (data subject) has the right to receive accurate information that is provided in an intelligible and easily accessible way.
Market Trends
Among private personal accident insurers, there is a trend towards combined products that include not only a wider definition of an accident but also additional insurance modules. With the number of branches being opened by German companies abroad rising as a result of globalisation, insurance cover for employees travelling on official business or on long-term secondments is becoming increasingly important for employers. The cover of accident, foreign travel health and liability risks corresponds to the legal requirements that employers have to comply with in order to fulfil their duty of care towards their employees. These combined products are often complemented by a baggage insurance policy and a whole range of assistance-related services.
The world of work has changed. New work models such as mobile working and home offices mean that employer-financed private accident insurance is becoming more important. This trend is supported by recent case law on the basis of which German employers' liability insurance associations do not regard an employee's accident that occurs on the way to the kitchen when working from home as an occupational accident.
In another case concerning a commuting accident, the respective employers' liability insurance association was also not required to pay. In this case, the person insured had disembarked one stop too late and died in a fatal accident when crossing the tracks on the way back to the intended stop. Since only the direct route, in either direction, between the place of work and the employee's residence is covered, the employers' liability insurance association did not pay out. Detours are not included in the insurance cover.
This gap in the insurance cover can only be closed by a 24-hour policy taken out by the employer on behalf of its employees in order to avoid delimitation problems in the event of injury.
There is also an increased demand for international personal accident insurance programmes. They allow internationally operating groups to give their employees worldwide the same commitment, like the accident insurance policy, under a centrally managed accident insurance programme. Thanks to centralised policiy management, the German parent company is always abreast of the latest development in costs in individual countries. Local laws are taken into account and, where necessary, local policies are installed, ruling out compliance infringements. Local differences in insurance amounts and coverage can be compensated for through the German master policy.
1 Aon Health Survey 2018
2 Fachkräfteengpassanalyse (Analysis of the shortage of skilled professionals), German Federal Employment Agency, 12/2017
3 Aon Health Survey 2018
4 German Private Health Insurance Association (PKV)
5 Verband Deutsches Reisemanagement e.V. (2017) VDR-Geschäftsreisenanalyse 2018 (Study by the Association of German Travel Management), 16. Ausgabe (16th edition)
6 Crown World Mobility, World Mobility Perspectives, 2018 Global Mobility Trends
7 Crown World Mobility, World Mobility Perspectives, 2018 Global Mobility Trends