Protecting employees is a major commitment for an insurer. In the UK alone, Generali pays in excess of £60 million a year to some 12,500 claimants a year.
That said, it can also be a highly profitable class of business if claims are carefully managed, and one in which intermediaries too can win significant earnings.
Group income protection is now a key focus for Generali, and the company sees its fortunes firmly linked to the intermediary channel. The company only deals with brokers and has some 1,000 agencies throughout the UK.
The key contact for Generali intermediaries is Colin Fitzgerald, the national broker sales manager who joined the insurer from private medical provider BUPA. He works closely with life division manager Nigel Balchin and is backed by a team of six regional development managers.
Five years ago Generali decided to focus on employee benefits, with group income protection forming a core part of this. Previously Generali had been known as an annuity specialist, Fitzgerald explains.
With employee benefits, the company initially specialised in the multi-national market and continues to retain such clients as General Electric. But it is now one of the top 10 of providers for the small company market, which it describes as firms with less than 200 employees.
Employee benefits covers a range of products, including group death in service and group personal pensions, in addition to income protection.
While there is flexibility in the way benefits can be purchased by the employer, Fitzgerald says there is increasing pressure on these companies to provide the best possible levels of protection.
And the fact that state benefits are often barely above subsistence level, combined with the strong UK economy and reducing levels of unemployment, means private provision of employee benefits is likely to rise.
Fitzgerald explains: “It has to be remembered that most employers don’t want to reduce their profits by giving staff benefits, but at the same time they have woken up to the changes in state benefits and individuals and companies must organise their own provision. In addition, many employers need to cover benefits if they are going to attract and retain the best staff.”
As Generali has moved to providing benefits for smaller companies as well as large, Fitzgerald emphasises the insurer does not just want to work with national brokers.
He says improving service to intermediaries has been an important part of his job and is now beginning to pay dividends.
Fitzgerald comments that in the past many intermediaries did not get a good deal from insurers. “Risk-based employee benefits traditionally meant intermediaries received poor service,” he says.
By this he means there was no single point of contact and, as a result, intermediaries telephoning for quotes would be passed around from department to department and would often receive documents late.
He says investment in both IT and staff means brokers now deal with a dedicated contact, commenting: “I would like to think the level of service we can now offer is exceptional.”
Finding out what intermediaries want in terms of products and service is a vital part of Fitzgerald’s job, but he says some areas are less likely to be subject to radical change.
He believes few intermediaries are anxious to move over to fee-based work rather than commission: “We would be keen to test the reaction of brokers to charging fees, but the majority of our intermediaries continue to want commission.”
As state benefits are likely to become increasingly inadequate, Fitzgerald says employers need to protect their employers through adequate private provision, and it is up to intermediaries to target potential clients. He says social group ABC1 will continue to provide most business for the majority of intermediaries.
But while benefits have traditionally mainly been the preserve of the white collar sector, Fitzgerald believes there could be wider opportunities. Claims for stress – largely experienced in professional jobs – are rocketing and may have an impact on premiums.
The blue collar sector, he says, should not be ignored. He remembers being impressed by a visit to a visit to a Kellogg’s cereal factory in Wrexham, north Wales: “There have been massive advances in technology and employee safety is taken seriously in well run firms, which makes them a far more attractive risk for insurers.”
Fitzgerald says Generali’s commitment to service can be seen in its growing reputation for claims handling. Claims are managed rigorously with Employers ReHealthcare employed to investigate individual cases and recommend action. He believes that using this company is sound risk management and should bring down the cost of claims.
Relying purely on GPs, he comments, is not always enough to prompt an early return to work.
Fitzgerald says the key to successful claims handling is to tackle problems early to try and ensure the soonest possible rehabilitation. “The longer a claimant is off work, there is a danger they either become too comfortable at home or suffer from a diminishing sense of their own worth.”
However, in the event of a claim, the individual is likely to receive the highest standards of care. “With income protection cover, the individual with be faced with a range of options, including re-training if necessary, with the emphasis on returning to work with their existing company.”
Despite taking a thorough approach, Fitzgerald insists Generali takes a more lenient view on claims than many of its competitors.
“The insurance industry has a reputation for being hard on claims. In our case we believe the bulk of claims are valid and we will then focus on the rehabilitative care aspects of the case.”
That said, insurers will continue to be stringent with income protection claims. “We provide the highest levels of service to the employee who has the claim, but it needs to be remembered that our contract is with the employer, and claims will eventually affect the premiums they pay. We don’t want to get into an open cheque book situation,” he says.
And, he points out, the Government’s new All Work Test is far more stringent than any methods used by insurers.
With income protection sales having largely remained static, no-one pretends this, and indeed other employee benefits, are an easy sell.
But Fitzgerald believes there is a new mood of self reliance sweeping the country, and the role of insurance is likely to become far more important. This change of emphasis, he feels, should be capitalised on by intermediaries who must use this when selling to employers.
“Most employers don’t want to give benefits, and, if they do, they just want to protect their top people. It is up to brokers to convince them they should provide them for all their workers.”
Intermediaries who want to find out more about Generali should enquire about a series of seminars on employee benefits scheduled to take place this year throughout the UK.