This year will see more debates around healthcare and group risk issues and challenges in the UK, as well as a continuing focus on wellbeing.

As this year has progressed, we have seen employers strive to introduce a broader range of preventative measures to create a healthier workforce. We see this trend increasing at some pace in 2014 as more employers recognise the role wellbeing can play in supporting business growth through greater engagement and productivity and the management of costs brought about through absence and presenteeism, along with increasing medical and disability claims incidences. Rebekah Haymes, senior consultant at Towers Watson, said: “All the signs suggest wellbeing is the new priority for many HR professionals. Whilst many employers are busy implementing new and developing existing wellbeing initiatives, others will turn their attentions in 2014 to maximising spend by identifying priorities, introducing targeted programmes, introducing effective delivery and measurement mechanisms whilst implementing an effective communication strategy which focuses on behavioural change. As we have seen stress-related absences are on the increase, a focus for many employers is to address this increasing issue through preventative measures as opposed to those that address stress at the point of need. We foresee a developing trend that will see employers introduce more resilience style support for employees as part of a wider wellbeing strategy.”

Healthcare benefits: a question of sustainability
UK businesses are already reassessing their approaches to employee healthcare, and a major dimension of this in 2014 will be the diversity challenge of managing multigenerational and globally-mobile workforces, balanced against concerns over the sustainability of providing private medical coverage to all employees. Factors such as rising medical inflation, an ageing workforce, medical advances and corporate globalisation create a smorgasbord of elements for employers to consider when setting a robust governance strategy for healthcare benefits. Joanne Anderson, senior consultant at Towers Watson, said: “A properly-applied governance approach offers many advantages, from defining expectations and processes to reducing risk and controlling costs. However, employers also recognise that providing high-quality and well-run healthcare benefits acts as a motivation, retention and attraction tool. As a result, in 2014 more employers will challenge the ‘one size fits all’ approach to healthcare benefits by implementing segmentation to provide benefit levels that are more relevant to specific employee groups. In addition, larger employers will consider deconstructing existing arrangements to introduce direct contracting with practitioner and clinical groups. These new models can deliver significant cost savings with no detrimental impact on benefit design, access to benefits, or clinical outcomes.”

Group life assurance – cost-effective financing and peace of mind
Insured group life assurance (GLA) benefits in the UK remain among the most cost-effective in the world, and now that providers are also taking a more pragmatic approach to covering catastrophe risks, insured benefits are offering a highly compelling solution for Trustees and scheme sponsors in 2014. Jamie Winter, senior consultant at Towers Watson, said: “As insured GLA costs continue to reduce in real terms, and as auto enrolment prompts stakeholders to reconsider their broader benefit offerings, we are seeing a notable increase in the take-up of insured GLA solutions. GLA providers can now commonly offer insurance rates which are below the reserving rate being applied within a pension scheme, and sometimes below even the expected base cost of claims in isolation. This extraordinary competitiveness is coupled with highly flexible policy terms and a much broader availability – and far better assessment and targeting – of catastrophe risk needs. This combination means that stakeholders can easily avoid the volatility inherent in non-insured solutions, can benefit from the peace of mind that generous catastrophe limits offer, and can implement sustainable and cost-effective insured solutions for the long term.”

Group income protection – redesign for the future
GIP benefits have historically been delivered using traditional design approaches, but Towers Watson expects the pace of design change to accelerate in 2014. Jamie Winter said: “The state is rapidly withdrawing from providing any financial help at all during a long term disability and employers are beginning to recognise the need to react to this. Also, employers are reconsidering their ‘deal on health’ with their employees following initiatives such as auto enrolment and the growing emphasis on wellbeing and productivity within organisations. The good news is that the GIP provider market has evolved its offerings significantly so that a much wider choice of solutions is now available to employers, including off payroll, limited term and lump sum options. This means that cost-effective and sustainable GIP plans can now be developed very easily, and employees are recognising the genuine value of this benefit in a ‘state won’t pay’ world.”

Auto enrolment – beware the group risk implications
2014 will see a massive acceleration in auto enrolment implementations as smaller employers reach their staging dates. But while the main focus will naturally be on pension provision, the potential implications for group risk benefits should not be ignored. Jamie Winter said: “The most obvious implication for employers is where their group risk scheme eligibilities or benefits are related to pension scheme membership in any way. Auto enrolment may result in significant increases in pension membership – witness the very low opt out rates to date – and therefore there will be a corresponding, and perhaps unexpected, cost increase in the risk benefits. It also may mean that categories of employee who were previously excluded from group risk membership may become covered, which in turn has cost and insurance eligibility implications. Even where group risk membership does not change significantly, employers should ensure that they’ve undertaken negotiations with their group risk providers to identify other potential issues, such as how the providers will deal with members who are auto re-enrolled every three years and who therefore will be late discretionary entrants to the group risk scheme.”