Accident & Health Update: Key coverages and claims considerations post-covid

When your people are healthy & protected, your business is healthy and protected.

The COVID-19 pandemic continues to impact the Accident & Health (A&H) segments.

With broad international travel being accessed again and international assignees being deployed, it remains paramount that employers continue their “return to normal” planning. Many businesses have a renewed holistic People Risk focus in order to reduce their risk profile and enhance their employee health and wellbeing strategies and benefits.

These businesses have introduced a duty of care based risk management approach, incorporating travel and security education, employee wellbeing and mental health programs, early reporting of claims strategy, digital tools (pre-trip medical, health risk assessments and employee travel tracking), review of medical evacuation protocols and assistance support.

Insurers are also actively reviewing their A&H portfolios, underwriting strategies and risk appetite leading to varying renewal outcomes with poorer performing policies being penalised. As there is no standard insurer COVID-19 coverage practice, care is recommended when comparing insurers.

Some key issues and insurer positions within the A&H market are outlined below;, however this is a dynamic environment, the information is subject to evolve and change;

International Health (Expatriate)

Most expatriate policies provide global coverage with generally nil pandemic exclusions. As expatriates returned home either for COVID-19 safety or voluntary early closure of assignments, insurers experienced a significant “shrinkage” in the number of insured persons.

Insurers coverage limitations on temporarily returned expatriates (home leave) remain in place, noting Australian expatriates with access to Medicare will have limited expat health policy cover in Australia.

The initial COVID-19 impact resulted in a reduction in claims, due to medical treatment restrictions and a delay for both emergent and routine care (including chronic condition management). Current claim trends indicate an increase in treatment, exceeding pre-pandemic levels of 2019.

Deferred healthcare remains in recovery and the impact is far reaching. This has led to an increase in mental health issues, long term consequences for chronic conditions (including undiagnosed cancers) resulting in more complex and lengthier treatment, higher costs and potentially an increase in mortality.

Renewal clients with stable insured persons and claims will expect rate increases in accordance with historical global medical inflation of 10%. Policies subject to historically poor performing claims and/or significantly reduced insured numbers will experience higher rate increases coupled with additional underwriting action. Insurer challenges are immense, specifically in understanding the true claims trends and impact of cost containment strategies (including telehealth services and active case management).

There is an overall reduction in insurer risk appetite for expatriate health insurance, especially when placed in isolation of other A&H lines. However most insurers will continue to provide COVID-19 medical coverage.

The majority of businesses are currently reviewing the viability of expensive overseas expatriate assignments. Now is an ideal opportunity to review expat insurance coverage to support the evolution of potential changes;

Necessity for expatriates
Fast tracking local country workforce development and employment
Virtual assignments
Localisation of expatriates
Short term or commuter assignments
Local county compliance
Cost containment strategies and employee experiences
Preventative treatment and pre assignment screening

Corporate Travel

Business travel experienced unprecedented disruptions through COVID-19 with the near elimination of corporate travel. Australian business and leisure travel is now accessible to most countries as evidenced by the fact that nearly 1.2 million Australian overseas departures occurred during November 2022 ¹ , (up from 91,000 the year before). Increased business travel rebound is further evidenced by global travel companies experiencing pre-pandemic level requests.

Allianz Partners has seen continued airport chaos drive up domestic cancellation claims (by 279% between April 2022 and June 2022) compared to the same period in 2019. This is in addition to a global surge in lost or delayed baggage claims.

According to Cover-More, a lack of flight availability is doubling claims costs to bring clients home and expanded COVID-19 coverage now makes up 30% to 40% of overall risk costs. Whilst repatriation and air-ambulance costs are also significantly higher reflecting fuel costs, additional regulatory and safety requirements. International SOS are managing 11% more assistance cases than prior to COVID-19.

Another often overlooked challenge involves a deficit in travel knowledge and pre-planning. World Travel Protection is seeing an increase in many preventable travel incidents, including an explosion in pickpocketing, scams and even animal bites to travellers. It remains even more important for travellers to familiarise themselves with risks associated with their travel destination(s) and to check company risk management strategies.

The shift in travel movements is striking against a travel industry being confronted by capacity constraints, lack of workers and inflation factors driving increased airfares as carriers offset higher energy costs and employees demand for wage increases.

With businesses returning to a “new normal”, it remains of paramount importance that employers review;

Travel health and security protocols,
Pre-travel education
Leisure and accumulation exposures,
Suitability and adequacy of existing insurance policy benefits and limits
Understanding of COVID-19 insurance coverage
Viability and practicability of international travel versus a virtual presence which is driving a renewed motivation to consider local resource capabilities or short term travel.

Insurers’ previous COVID-19 insurance claim volumes (primarily for Loss of Deposits, Cancellation and Additional Expenses claims) together with current challenges, are expected to further impact their renewal appetite and pricing including restrictions towards bleisure and private leisure travel.

We anticipate insurers to also challenge the accuracy of declared travel whilst increasing their cost per declared trips. This coupled with an expected increase in declared travel will compound Corporate Travel premium increases.

Many insurers are regularly reviewing their corporate travel coverage which is being influenced by community expectations, however most insurers have now extended coverage to include loss of deposit/cancellation/additional expenses coverage for COVID-19 events caused prior to journey commencement or during. Despite this we suggest care is required to understand individual policy terms and conditions at renewal.

Group Personal Accident & Sickness (GPA)

Claims volumes in the Group Personal Accident & Sickness (GPA) segment from or during COVID-19 have remained stable. Of much greater concern is the economic consequences of the virus, employee retention rates, employee wellbeing, increases in mental health claims and an increase in average claims values.

Reduced payrolls in some industry segments has reduced overall GPA premiums which could be offset by further increases in funding for infrastructure and building projects.

No COVID-19 specific exclusions are generally applied to GPA policies. Likely, however will be price increases based upon individual policy performance and inflationary factors. There remains sufficient insurer capital and appetite to create pricing tension.

Now is an ideal opportunity to build a GPA eco-system to ensure a health workforce and if a claim occurs a protected workforce. This strategy incorporates close monitoring of incurred claims and a robust early reporting and return to work structure.

Where clients have income protection polices, by virtue of Enterprise Agreements (EA’s), Mercer Marsh Benefits is offering a free EA income protection health check; including potential efficiency gains and benefits of consolidation, claims review, premium options and potential savings.

Conclusion

The future of work demands healthy and engaged employees, so now is the time for employers to consider proactively implementing a holistic People Risk plan. Fortunately, 95% of employers believe investment in health and well-being will be the same or greater priority in the future. 

Developing a comprehensive health and wellbeing strategy should be initiated by the C-suite and involve human resources, Environmental, Social & Governance (ESG), occupational health and safety, risk management, operations and marketing and communications. 

Employers cannot afford to do nothing! Employee health and well-being is business critical. When your people are healthy and protected, your business is heathy and protected.

[1] Australian Bureau of Statistics – Overseas Arrival & Departures

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This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting, or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, accounting, tax, or legal advice, for which you should consult your own professional advisors. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage. Any modelling, analytics, or projections are subject to inherent uncertainty, and any relevant analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change. LCPA 23/131

Accident & health update: Key coverages and claims considerations