Employee safety and compensation: A case of a supermarket
The recent robbery incident at one of Ghana’s leading supermarkets in Accra really emphasised the need for a compulsory Group Life Insurance, as was advocated by both the National Insurance Commission (NIC) and the Ghana Insurers Association (GIA) at the third Life Insurance Conference in Accra in 2015.
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Following the abortive robbery, much attention has been on the heroic taxi driver, whose singular effort thwarted the plans of the robbers, almost to the neglect of the employee of the supermarket, who was shot by the robbers while on duty.
While this incident may be viewed in isolation, the bigger concern should be the adequacy of employer-sponsored welfare schemes to compensate an employee in the event of mishaps of this nature, while he/she is on duty.
For instance, in the security services, officers who fall victims to such mishaps while on duty are often rewarded with promotions (i.e., whether alive or posthumously). The thrust of this week’s piece is thus, to encourage employers to begin to consider the cost of employees’ security while at work, as part of their operational cost. In this regard, the NIC and GIA must hasten their dialogue with employers for the immediate commencement of the compulsory Group Life Insurance Scheme in Ghana with a possible legislative support. I am positive that employers will endorse this scheme as a means of protecting their most valuable asset (employees).
The role of Group Life Insurance
Group Life Insurance is playing an increasing role in organisations across the world. This is especially so with employee benefit plans, where an employer provides a form of life insurance, often as an additional benefit to employees’ salaries and wages. The most obvious difference between individual and group insurances is that the latter covers a number of people under a single policy. Typically, the main parties involved in Group Life Insurance policy are the insurer and the group policyholder, usually the employer (or club or an association). The individuals covered under the group policy are often referred to as group insured or group life insured or persons insured. The most common form of Group Life Insurance is group term life. This is typically provided to the employees by the employer in the form of a yearly renewable term insurance policy. When the policy is due for renewal, both the insurer and the employer can determine whether or not to vary the terms of the contract, based on such factors as claims ratio.
What is covered
Most standard group life policies provide cover for an employee or a member of a group, but in some cases, extended to cover immediate family members against the risk of death and disability, with benefits often ranging between 1 and 6 times an employee’s annual salary. Similarly, an agreed lump sum may be paid to an insured or his/her nominated beneficiary in the event of temporary and/or permanent disability. Most group life policies provide detailed cover to employees’ human parts; thus, indicating the benefits payable in the event that an employee dies or loses a limb, leg, arm, eye, nose, ear, speech, hearing, etc.
Convertibility
Most group life policies have convertible clauses in them. Thus, when an employee leaves the job or retires, he/she may be allowed the opportunity, within a specified period and without proof of insurability, to convert the group policy into an individual one and pay the relevant premium.
Relevance to the employers
Managing cashflow is one of the major challenges that organisations face in a competitive landscape; hence it becomes a burden for an organisation to pay out huge benefits from its reserves when an employee dies or suffers some form of disability.
With the group life cover, that burden of claim payment is taken away from the employer, thereby allowing the employer to focus on the core mandate, without recourse to being saddled with claims from employees.
The group life scheme is, therefore, responsible for paying the agreed benefit to either the employee or his/her nominated beneficiary. Mostly, group schemes do not require medical underwriting. However, where it is required, a ceiling is given in order to allow premium loading.
Premium
In terms of affordability, group insurance premiums are relatively cheaper compared to premium for individual policies. Prior to the No Premium No Cover (NPNC) policy, arrangements could be made with the insurer to stagger the premium payment into quarterly or half yearly to ensure smooth operation.
The challenge here was that some employers defaulted in the premium payment until an employee suffered a mishap - one of the apparent reasons the NPNC policy was implemented.
The way forward
The existence of employees’ welfare schemes has become an important yardstick for measuring organisational reputation. Group Life Insurance is, indeed, one sure means by which organisations can boost employee commitment and morale, which could spur them into willingly contributing their discretionary energies, beyond the norm, towards the success of the organisation.
Not only will employees feel protected by a Group Life Insurance, but most importantly, they will feel a sense of security and protection for their families. The NIC, together with the GIA, must continue to intensify the public education about Group Life Insurance in order that all stakeholders will get along with it.
As is the case in Nigeria and a few other African countries, it has become very necessary for a legislation to make it compulsory for all employers to provide a comprehensive Group Life Insurance package for their staff.
This will not only make employees more productive, but their organisations will also be seen as good corporate organisations.
Until next week, this is insurance from the eyes of my mind. — GB