Employee benefit providers have provided a fair amount of detail around changes to the policies caused by the Coronavirus epidemic. Here, we will raise your awareness of potential changes to policy coverage and the typical insurance scenarios that might play out. We’ll update our article as and when we are notified of changes by insurers.
Group life assurance
In principle, if any employee covered under group life assurance die whilst in employment, the policy will pay out. However, employers should take note of the exceptional COVID-19 related travel restrictions coming from the Foreign & Commonwealth Office (FCO), because insurers are unlikely to cover members who travel abroad for business reasons during this time.
Policy catastrophe coverage
Coverage could apply for Covid-19 cases if it is included among the originating causes in the catastrophe clause and the catastrophe provisions under the policy are met. The catastrophe coverage minimum limit, which can be at least £100m per policy in some cases, restricts the amount of total benefit payable in and around certain postcodes as defined by an insurer. As catastrophe coverage limits are generally very high, it is very unlikely that COVID-19 case claims would reach that level. Policyholders should check the total amount insured and insured locations along with specific policy documents.
Group income protection
Under group income protection (GIP) policies, the terms of these policies continue to be applicable generally. This includes the member meeting the definition of incapacity and being unable to work due to injury or illness for the entire duration of the policy deferred period. The deferred period would be calculated from the first day that an employee was unable to carry out work due to illness.
In terms of COVID-19 impact on GIPs:
- It is likely that a claim would be paid if the policyholder is diagnosed with COVID-19 and GIP policy terms are met.
- If a member is in self-isolation or shielding and then subsequently is diagnosed with COVID-19, the self-isolation does not automatically count towards the deferred period as the deferred period would start from the date the member first became unable to work due to illness. Periods of absence during the deferred period will be linked if they are due to the same related cause.
- Note: Not all GIP providers include a requirement to follow FCO guidance for business travel.
Following a recent emergency round table meeting of group insurance providers, the general consensus is that insurers will cover the pre-furloughed salaries of any employees who might be adversely affected, rather than any lower salaries they may now receive. This will be on the premise that employers continue to pay the GIP policy premiums. This will be subject to each insurer making their own decisions and how they react to changing government legislation. Insurers will want to ensure good customer outcomes and that policyholders are treated fairly. Employers will not necessarily need to request changes to GIP policy wording but they should ask providers to clarify meanings with greater transparency. This will undoubtedly take time due to the technical work involved.
Group critical illnesses
If COVID-19 is not listed as a critical illness under insurers’ defined lists of critical illnesses, such a policy would not pay out if an employee was diagnosed with the virus.
COVID-19 impact on private medical insurance
The advent of COVID-19 has meant that routine private medical treatment that may have been pre-agreed, will more than likely be postponed or cancelled until the crisis is over. Insurers are looking at ways to ensure that members of medical insurance schemes are not completely disadvantaged as a result.
The UK’s second biggest healthcare provider, AXA PPP has recently stated that it will review and adjust premiums to take into account any delays to treatment during the current crisis but this will be independently audited and is unlikely to take place until the end of 2021. Further support announced by AXA:
- offering a number of policy enhancements to help members during the current crisis, including setting up a clinical support centre which will provide access to members to specialist consultants, cancer consultants and those working in cardiology ENT, gastroenterology, orthopaedic and paediatrics, by telephone or video
- offering its virtual GP service – Doctor@Hand – to all UK individual and SME members
- waiving policy excesses and benefit limits or restrictions on outpatient services on these plans
Bupa has pledged a rebate to its UK health insurance customers amongst its COVID-19 response actions. Visit Bupa website to find out more.
Members of private medical insurance schemes should be aware that private hospitals started suspending non-emergency operations since the outbreak, while they work with the NHS to maximise capacity to care for people with COVID-19. It is difficult to predict how long this unprecedented situation will last for, but members should speak to their consultant if they have already had pre-authorisation for private medical treatment. While members will only be able to receive treatment for COVID-19 on the NHS, they may still be entitled to a cash payment for overnight stays in NHS hospitals or a private medical facility used by the NHS if this option is included on their insurance plan.
Mental health support to policyholders
Insurance providers are still offering support to members who are suffering from mental health issues and where COVID-19 has had an effect to their overall wellbeing. Alternatively, policyholders can request telephone or webchat consultations, to avoid the need to visit GP surgeries.
What should employers do next?
- Revisit the particulars of group insurance policies
- Monitor any business travel by employees
- Take this opportunity to revisit and highlight any value added support employees could receive through group protection products during the pandemic.
For example, employers can consider using one of their insurers’ Employee Assistance Programmes (EAP). This cost is included in their normal premiums. These typically include the following features:
- Employees have access to 24/7 telephone counselling support (face to face if required) on a range of issues such as debt and childcare.
- Employers can also receive support on a range of basic employment related issues including legal assistance.
An EAP will however typically be limited in terms of support to employers so as such, employers with more complex queries or those seeking bespoke advice should seek advice from a professional adviser.
What should individual policy holders/scheme members do next?
Members of medical insurance schemes should follow these steps:
- Check the scheme certificate along with the policy terms and conditions
- Review all updates to the scheme sent by their insurers
- Contact their respective providers to learn about updates to policy information
- Sign up online for access to respective schemes, as this will be the quickest way to learn about updates and policy/product information
The information contained is based on Buzzacott Financial Planning’s current understanding of the legislation and changes introduced by insurers. It was last updated on 20 April 2020. As developments come to light, we will update this article.
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