Preventing Wellness Programmes From Losing Money

Generally, organisations implement wellness initiatives in order to improve the well-being of employees and to help save money. However, if these types of programs are improperly organised or mismanaged, the potential benefits could be rendered moot in addition to negatively impacting organisations’ bottom lines.

The potential for such an adverse outcome was investigated recently by the Harvard Business Review (HBR). In its article, HBR cited a study conducted by the Health Enhancement Research Organisation (HERO), a US organisation that provides assistance to not-for-profits in order to help them become more efficient.
The study compared dozens of wellness initiatives implemented by organisations from a variety of industries and found that an organisation saves an average of £0.65 ($0.99) per employee per month due to its wellness program. Yet, the average cost of the program was £0.99 ($1.50) per employee per month—resulting in a loss of £0.34 ($0.51). Depending on the number of employees your organisation employs, coupled with the number of wellness initiatives that have been implemented, your organisation could experience severe financial loses.
However, HBR’s article did assert that wellness initiatives could be beneficial and cost effective if they are properly implemented. So, to ensure that your organisation’s programmes are effective, follow these three pieces of guidance.

1. Inspect your organisation to identify any potential hazards and make adjustments to minimise these negative effects.
2. Stock your vending machines with healthy food options: fresh fruits and vegetables, nuts, whole grains and microwaveable meals with less sodium.
3. Establish a wellness committee to discuss what types of initiatives would be the most practical and effective for your organisation.

To verify whether your organisation’s wellness programs or initiatives are cost effective, use this ROI calculator developed by the Harvard Business Review, www.dismgmt.files.wordpress.com/2015/06/quizzify-savings-calculator-2015-05-15v4.xlsx. Although the calculator will collate your organisation’s data into US dollars, the solution that it provides will still be valid when converted to sterling.  

 

 

Digital Technology: Threat or Opportunity?

 

Digital Technology:  Threat or Opportunity?

Digital technology continues to seep into the insurance sector, disrupting traditional sales channels and unleashing a torrent of potential new revenue streams. So far, the sector has been able stay afloat on the rising tide, but the digital deluge shows no signs of stopping—how long can the sector keep treading water without completely adopting digital? Does digital technology threaten to drown the entire industry as we know it?

 

 

Customer adoption of digital technology—which includes mobile phones, social media, cloud computing, data analytics and other digital platforms—continues to outpace the insurance industry’s capabilities. But rather than fade into obsolescence, the industry is poised to take advantage of the new opportunities presented by digital technology.

Customers and the technology used to sell and service them are changing. Until now, the industry has survived these ongoing changes by employing quick fixes and patchwork remedies, but it has neglected to overhaul its basic model to allow digital adoption from the ground up.

The result has been an inflexible industry (with several exceptions) unable to quickly adapt to new consumer needs and expectations. Indeed, despite the estimate that 75 per cent of all insurance policies will be sold online by 2020, according to a 2014 global survey commissioned by Google, only 8 out of Europe’s top 36 insurers are currently taking a strategic, comprehensive digital approach in responding to customer needs, according to a 2015 survey from research firm, Comprend. Last year, 50 per cent of insurance policies were sold online in the United Kingdom, according to PricewaterhouseCoopers.

Due to digital technology’s lightning-fast and global wholesale adoption, doing nothing to adapt is akin to falling behind. In the coming years, the sector must contend with reconciling digital tools and strategies with non-digital legacy systems, ensuring the smooth and safe transfer of customer data, restructuring collapsed sales channels, learning how to use mountains of data effectively and more.

Failure to do so will allow outside-industry forces to poach the most valuable parts of the sector’s revenue streams. Research has already begun to quantify the profit at risk—about 30 per cent, according to the Financial Times. Insurers that apply digital technologies across the organisation could add between 31-38 per cent of profit over the next five years, while insurers who only dabble could be losing just as much. Simply tacking on digital solutions to legacy infrastructure is not enough, as it bogs down insurers with additional spending, while new entrants unencumbered with clunky legacy systems use digital technology to sell insurance products at a much more competitive price.

Going forward, the sector must treat the digital deluge as a culture shift rather than a sea change. The sector is still based on solid relationships and buoyed by great customer service—there is no need to move away from this. Instead, the sector should use the opportunities presented by technology to build upon what makes it great—providing necessary products that grant peace of mind and make business happen.

Insurers should use digital technology to make themselves more relevant in the age of instant gratification. Brokers will no longer suffice by just communicating with clients once per year. Adopting digital technology does not mean sacrificing good service—on the contrary, digital tools can help send out regular, personalised communication that clients want. A surprising 38 per cent of UK insurance consumers prefer receiving communications at least semi-annually from their brokers or insurers, while only 23 per cent actually do, according to Ernst and Young’s 2014 Global Consumer Insurance Survey. Digital technology promises more customer-centric products, constant and meaningful client communication, tangible benefits, more accurate pricing, improved claims experiences, and more.

Sensible, comprehensive digital adoption should continue lowering premiums for all insurance consumers in 2016 through process automation, more accurate risk calculation and more stringent fraud detection as insurers take the leap and make the investment.

 

 

 

 

 

UK Pensions Update

 

 

 

UK Pensions Update

In the words of the renowned Bob Dylan, ‘Times they are a changing’ – and never more so than in the UK pensions arena, with some very specific challenges for UK employers, employees, and advisers in 2016.

 

Automatic Enrolment and the smaller employer

We are now firmly in the Government’s planned time frame when smaller employers must auto-enrol their employees.  Although last month saw a 6 month easement on the time periods for AE contribution increases, staging dates (the date when their new duties start) remain unchanged.

Market capacity issue

Why were these dates put back? Quite simply the Government underestimated workloads and costs on smaller employers, and that there is a very real ‘capacity issue’ with pension providers struggling to meet demand for new AE pension schemes.  Many UK pension providers are now restricting their AE services, imposing charges, or only seeking larger schemes with contributions significantly higher than statutory minimums.  So, even if an employers’ staging date is some way off, it is vital that they start planning for AE now – or risk being driven down the Government backed NEST scheme route which has some significant restrictions, and is still unlikely to be immune from capacity issues.  

Adviser remuneration now fee based

The UK ‘Retail Distribution Review’ (‘RDR’) has created a fundamental culture change in the UK pensions industry, as advisers can no longer receive commissions paid by the pension provider and must now charge fees directly to employers for their advice and services.  Employers will therefore need to factor in these costs into their budget planning, in addition to their pension contribution payment responsibilities.

Changes to pension tax relief?

Substantial tax relief is given back to UK individuals who make personal contributions to their pension (circa £32bn per annum), with the lion’s share of this benefitting higher rate tax payers.  A consultation is in progress to review pension taxation, and it seems likely the government will be seeking to restrict tax relief for at least higher earners.  Higher rate individuals should consider increasing their pension contributions whilst additional rate tax relief remains available. 

Lifetime Allowance

From 6/4/2016 this is dropping from £1.25m to £1.0m and will likely double the number of individuals affected.  Some complex ‘protection’ options are available, and advice may be needed.

Salary sacrifice

Salary sacrifice generates National Insurance (‘NI’) savings by allowing employees to sacrifice some salary in exchange for employers making an equivalent pension contribution.  Rules were relaxed to accommodate AE but increased take-up is now having a detrimental impact on NI funding.  The government is now reviewing its stance on salary sacrifice schemes, and if withdrawn or restricted any ‘lost’ NI savings would be detrimental for employers and employees.     

Pension Scheme Governance

A statutory requirement for trust-based money purchase pension schemes since April 2015, a growing ‘best practice’ trend is for employers with ‘group personal pension’ arrangements to also consider installing a Governance framework.

 

How In2Matrix (UK) can help - early AE planning and employee communications

We work closely with employers to advise, plan and manage their AE process. We can also help design and facilitate a structured approach for employee communications which can include a benefits communication pack, group presentations, and one-to-one generic pension surgeries.  We can assist with the facilitation of a Governance Committee, structuring a meeting agenda, and attending meetings.  For employees requiring specific advice, we can agree relevant work and fees with them directly covering a range of services including pension transfer advice. 

 

To receive more updates, please contact:

Richard Birch FCII APMI APFS DipIEB

Chartered Insurance Practitioner

Director - Employee Benefits

In2Matrix (UK) Limited
101 Finsbury Pavement, London, EC2A 1RS

T: 0203 638 5152

D: 0203 638 5159

E-mail: richard.birch@in2matrix.com

 In2Matrix (UK) Limited is an appointed representative of In2 Consulting Limited, 

which is authorised and regulated by the Financial Conduct Authority