Coronavirus makes employee benefits a “truly global risk”

With barely a country in the world untouched by the coronavirus, it has become the first “truly global risk” for the employee benefits sector according to expert Sven Roelandt.

Roelandt, Aon’s global expert for employee benefit financing strategies and carrier relations, has been extremely busy over the last couple of weeks dealing with the impact of coronavirus on employee benefits. And he has seen just how different this event is to any other before in this space.

“This is in many ways a unique time in history, but that will also be the case for employee benefits,” Roelandt told Captive Review. “I personally think because it’s actually the very first time that employee benefit risk, from my perspective, will be looked at as a truly global risk.

“We’ve had large claims that we’ve had to deal with. We’ve had specific issues in countries, even in regions. But we’ve never had a risk that impacted the entire world from an employee benefit perspective.”

Roelandt said that this will also change how many companies look at their employee benefits coverage, and push more organisations towards looking at a captive solution.

“I feel that what we’re living through now is shifting the discussion from employee benefits, sitting with HR more towards the remit of a risk manager because it truly has become a risk now,” Roelandt explained.

“The conversations start with okay, what happened? Where were we not covered? What did we do? into, what are we going to do for the next pandemic and how are we going to mitigate all the issues that we ran into?

“And inevitably, you open up the conversation around captives. It’s inevitable.”

This shift in conversations to captives will happen partly because many multi-nationals are currently realising that much of their current insurance, particularly in the employee benefits space, isn’t meeting their needs in the pandemic.

Roelandt said that the main questions clients are asking currently are about pandemic exclusions.

“The main issues are definitely around pandemic being excluded,” he explained. “And asking how can we waive that?

“Yes, you can waive pandemic, but not while the pandemic is ongoing. That’s not insurance risk, that’s just a financial transaction.”

Because of this, many multinationals are looking for other options, including captives, because they are looking for ways to cover the gaps they have discovered in their insurance.

“Companies are asking us to give them a list of all their policies and give them where it’s included and where it’s excluded. And tell them where it’s excluded, tell them how we’re going to solve it,” Roelandt said.

“That’s the main question that comes from all clients. And that is around governance. And that is right up the alley of employee benefits and captives, more governance, more flexibility.”

Moving forward, as the situation develops, Roelandt believes two things: that captives will become more and more popular as a solution for companies, and that they will be more global.

“I think we all saw already in the last two to three years that the interest in employee benefits was starting to seriously increase,” he said. “But now, I think that’s just going to accelerate.”