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

Discover key coverages and claims considerations in the Accident & Health (A&H) insurance segment post-COVID. Read our insights into insurer positions and trends, and get valuable information to help you navigate the complex world of A&H coverage.

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

The COVID pandemic continues to impact the Accident & Health (A&H) segments; from the near elimination of business travel and reduced wage roll to a deep shrinkage of expatriate assignees.

With broad international travel being accessed again, 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.

Insurers are also actively reviewing their A&H portfolios, risk appetite and penalising poorer performing accounts with the introduction of coverage restrictions and increasing premiums. As there is no standard insurer COVID coverage practice, care is recommended when comparing insurers.

Current market conditions have highlighted the need for a best practice duty of care review, being risk based and incorporating education, employee wellbeing and mental health, digital tools (pre-trip medical & health risk assessments, travel tracking), security, evacuation and medical assistance support. With Group Personal Accident & Sickness (GPA), early reporting of claims and intervention with a clear return to work strategy is vital.

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 safety or voluntary early closure of assignments, insurers experienced a significant “shrinkage” in insured persons.

Insurers coverage limitations surrounding 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 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 global medical inflation increase (approximately 10%). Policies subject to historically poor performing claims and/or significantly reduced insured numbers will expect higher rate increases coupled with additional underwriting action. Insurer challenges are immense, specifically to understand the true claims trends and cost containment strategies (including telehealth services and active case management).

Whilst there is an overall reduction in insurer risk appetite for expatriate health insurance - especially when placed in isolation of other A&H lines -the majority of insurers will continue to provide COVID medical coverage.

The majority of employers are currently reviewing the viability of expensive overseas expatriate assignments. Now is an ideal opportunity to review expat insurance coverage as companies consider:

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 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 overseas departures occurred during November 2022^[1], up from 91,000 the year before (Australian Bureau of Statistics – Nov 22). With businesses returning to “new normal”, it remains of paramount importance that employers review both corporate travel internal plans and insurance policies.

Data from four top global companies that manage corporate travel indicate a rebound in business travel to levels between 60 to80% of pre-pandemic levels and in some places edged ahead. Although travel isn’t uniform, there is an expected increase in travel to China and Hong Kong. According to International SOS, they are now managing 11% more cases than prior to COVID.

This shift is striking against a travel industry being challenged by major capacity constraints and lack of workers. Inflation is also a new insurer challenge; airfares have risen (especially some business-class tickets) as carriers offset higher energy costs and employees demand wage increases.

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

Allianz Partners has seen airport chaos drive domestic cancellation claims up 279% between April 2022 and June 2022 compared to the same period in 2019. This is in addition to a 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.

Another often overlooked challenge involves a deficit in travel knowledge and pre-planning. World Travel Protect 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 the change in risk and to check company risk management strategies.

We anticipate insurers to increase their cost per declared trip which, when coupled with an expected increase in declared travel will compound Corporate Travel premium increases. The current travel environment will also challenge client’s accuracy of declared travel, which may lead to the reintroduction of actual travel declarations at the end of the insured period and subsequent premium adjustments. The question of viability and practicability of international travel versus a virtual presence with an expected renewed focus upon local resource capabilities or short term travel.

With all of these new challenges, clients are now focusing upon travelling employees safety and wellbeing, whilst understanding the implication of insurer-imposed COVID limitations and how best to cover employee leisure travel.

Many insurers are regularly reviewing coverage which is being influenced by community expectations, however many have now extended coverage to include loss of deposit/cancellation/additional expenses coverage for COVID 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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Accident & Health Update: Key coverages and claims considerations post-covid