Group disability insurance in South Africa is highly commoditised. As such, purchasing decisions are often largely driven by price.
It is important to remember, however, that while offering group disability insurance to employees costs businesses money, the cost of disability in the workplace is even higher, according to Elna van Wyk, head of underwriting and disability management at Momentum Corporate.
She says a price-only focus undermines the real value of group disability insurance.
"In order to unlock the real value of group disability benefits, employers and their financial advisers need to look beyond price."
Van Wyk adds that premiums for this highly-valued employee benefit have gradually increased over the years.
"Over the last few years, claimants have increasingly opted to stay on disability longer, choosing the relative security of a generous disability benefit over what they perceive as a less secure return to work in a stagnating economy. More claims of longer duration inevitably result in higher premiums for employers," says Van Wyk.
"This is where the financial adviser's role is pivotal. Financial advisers are encouraged to partner with a leading employee benefits provider with a holistic approach to disability in the workplace."
Some of the key conversations financial advisers should have with their clients should be about the changing nature of disabilities, as well as the role that prevention, early detection, rehabilitation and re-skilling can play in reducing the direct and indirect costs of disability.
Non-communicable diseases, commonly known as chronic diseases of lifestyle, are also playing an increasingly more significant role in disability claims.
Van Wyk goes on to say that early detection of health risks and timeous management can also reduce the severity and impact of the disability.
"Rehabilitation is key in minimising the negative impact on the employer’s bottom-line. Insurers and employers need to work together to aid rehabilitation, re-skill if necessary, and facilitate recovery. This paves the way for a successful return to work and reduces the employer’s recruitment and skills replacement costs," she says.
A more holistic approach to disability management focuses on the employee’s overall financial wellness that encourages choices which improve physical and financial health and reduce the risk of disability.