People Risks: 2021 Australian Market Recap

Mercer Marsh Benefits presents the 2021 People Risks Market Recap Report, the first in a series of six reports from Marsh which take a deep dive into some of the insurance lines represented in the latest Global Insurance Market Index.

The Report presents a detailed wrap-up of conditions in the main areas of People Risk insurance, from Accident and Health to Workers Compensation, and Life Insurance.

Accident and Health

The Accident & Health (A&H) market has experienced unprecedented change, from the near elimination of business travel, to reduced wage roll, and a deep shrinkage of expatriate assignees due to COVID-19 lockdowns. Our working and personal lives will continue to be transformed as a result of COVID-19 with varying impacts.

As international and domestic borders reopen, it remains of paramount importance that employers continue their “return to normal” planning. There is a renewed focus on client holistic People Risk, including reducing risk profiles in conjunction with assessing how clients’ insurance coverages may be impacted by insurer-imposed COVID-19 limitations & exclusions.

Insurers are actively reviewing their A&H portfolio, risk appetite, penalising poorer performing accounts and in some instances introducing COVID-19 coverage restrictions. There is no standard COVID-19 coverage practice.

The full Report further outlines some of the key issues and insurer positions within the various areas of the A&H market, noting of course that this is a dynamic environment, and the information is subject to change.

Workers' Compensation

Much like the other areas of People Risk, the Australian workers’ compensation landscape has been challenged significantly by the pandemic and changes to what businesses are now considering the “new normal” when managing COVID-19 in the workplace. At a national level, this has resulted in increased market pressure on rates and claims experiences. This has in turn led to anticipated increases in premiums in 2022 and beyond, as both insurers and Government regulated schemes look to claw back poorly performing funding ratios. As a result of these trends more clients are focusing on assessing alternative premium arrangements as a way of identifying premium savings on their workers compensation program.

In the full Report below we delve further into the national picture and also deliver a closer state-by-state and territory analysis of conditions over the past year, with an eye on what may come in 2022.

Life Insurance

The Australian life insurance market has experienced a period of continuous challenges over the last three years due to the legislative changes to insurance within superannuation, mergers and acquisitions, and the impact and uncertainty that COVID-19 has imposed on the economy. This last point saw life insurance revenue fall by approximately 6.6% in 2020-21; mainly driven by higher cancellation and lapse rates (in the retail sector), and fluctuations in investment returns. However, revenue is forecast to grow at an annualised 2.8% over the next five years (IBIS World: Life Insurance in Australia (November 2020), as we begin to see some economic stability in a post-pandemic environment. In relation to market competition, the number of providers remained stable during 2021 after acquisitions that took place in 2019 / 2020 left us with fewer options but still with a highly competitive market.

For deeper insights into the state of the Australian life insurance market, please continue to the full Report below.

Rising mental health claims - a unifying theme

A stand-out finding of the Report is the pervasive impact of COVID-19 and the concerning rise in mental health claims across all areas of People Risk, from Accident & Health, to Group Life, and Workers’ Compensation. With 95% of employers saying that investment in health and well-being will be a priority in 2022, now is the time for employers to consider proactively implementing a holistic People Risk Plan.

Employee health and wellbeing should be made a business imperative through appropriate risk management intervention and risk profile articulation bringing together human resources, ESG, occupational health and safety, risk management, operations, and marketing/communications.

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”