Group Income Protection - an employee benefit worth providing?

Industry Insider: Renee Coffey

Hi Renee, how long have you been working with Group Income Protection policies?

Since starting with Coverforce 10 years ago now, I've always worked with Group Income Protection policies in some capacity; from policy administration, to processing claims and payments, to visiting with employers and providing employee presentations, and now as National Manager of Employee Benefits, I am responsible for all our Group Income Protection clients accross Australia.

Fantastic, then I'm talking to the right person. So, what exactly is Group Income Protection?

Firstly, I'd like to note that Group Income Protection can be called quite a few different names including; Personal Accident Cover, Group Risk Insurance, Group Salary Continuance and quite a number of others. Generally, all these policies can be written as a group and will provide similar income protection benefits.

Group Income Protection is insurance that is taken out by a corporation on behalf of it's employees. The policy will protect the employees income in the event of total or partial disability caused by accidental injury or sickness, 24 hours a day and 7 days per week. The employees are the benefiticaries of these policies.

In a similar way to insuring your car or house, an income protection policy insures your future earning capacity.

So if I was covered by this policy and I got injured on a skiing holiday in Switzerland my income would be protected?

Absolutely. Some policies will have territorial limits but ours do not, you are covered for accidental injuries and sickness 24 hours per day, 7 days per week, any where in the world.

Wait a minute, isn't much of this already covered by Workers Compensation in Australia?

Not really, Workers Compensation will not cover you for non work related sickness, nor will it cover you for accidental injuries that happen outside of the workplace.

Unfortunately, even if you have a work related sickness or an accidental injury that does happen at work you will only be covered for the legislated amount in your state. You cannot choose your rate of cover.

For example; should you have an accident at work in NSW, you will get paid at the current weekly wage for your profession for 26 weeks, then at the statutory rate thereafter until you return to work. Currently the statutory rate is around $409.10 per week*.

Considering many employees are earn well above the current weekly wage and that there is generally no compensation for lost overtime, bonuses or other income, right off the bat it would be quite difficult to meet regular rental or mortgage repayments and other financial commitments. And after 26 weeks, once you get to the statutory rate of $409.10 per week* it would again become much more difficult for you and your family financially.

* The statutory rate is provided under Section 37 of the Workers Compensation Act 1987, the rate of $409.10 is applicable from 01/10/2010 to 31/03/2011)

Put simply, an income protection policy protects and employee's real earning capacity and allows them to maintain their standard of living during a time when they really need to be worrying about their health, not their bank balance.

That's really confronting. If your employer is not prepared to take out a policy like this, can empoyees take out a similar policy themselves?

Yes and no. Employees can take out individual income protection policies, however as they are not a part of a group, their standalone policy will be much less affordable and will generally provide less benefits.

The power of purchasing as a group means the insurer will charge a greatly reduced premium per person for a very high quality policy. Plus generous policy features can also be negotiated and included at very minimal additional charge and in some cases no additional charge.

Some examples of non-traditional benefits that can be intergrated into Group Income Protection policies include:

• Rehabilitation and return to work assistance
• Loss of life benefits
• Funeral benefits
• Bill payment assistance (should an employee become redundant the insurer can assist with bill payments for up to three months)
• Workers Compensation Top Up (Payment of the difference between your workers compensation payments and your actual wage)
• Homemaker assistance
• Reduced waiting periods and increased coverage limits

So, do you feel that Group Income Protection Insurance is an Employee Benefit worth providing to employees?

Absolutely, many groups of employees will actually negotiate with employers to provide this insurance, as it offers employees real protection for themselves and their families should the need arise.

When we set up a Group Income Protection Policy for an employer we are available to go out to their place of work and deliver a presentation to all their employees so they understand what this really means for them.

Also, it can be a real point of difference for employers in fields with skills shortages as it holds a lot of value for every employee, from single income families, to those with large financial commitments.

Excellent, where can employers find out more information about Group Income Protection Insurance?

They can contact myself (Renee Coffey), or Jim Angelis at Coverforce on 02 8814 4700.

IMPORTANT: General Advice Warning General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness. Consider our disclosure documents, which include our FSG and Product Disclosure Statements PDS) for some products.

IT Liability Policy – just PI under a different name or something more?

When dealing with IT Professionals we are often asked whether an IT (Information Technology) Liability Policy is truly necessary or if an often cheaper general Professional Indemnity Policy would provide the same cover.

To answer this question it’s important to explain that the IT Liability policy was actually created as an answer to an insurance dilemma for IT professionals and insurers alike - whether claims against IT professionals should be covered under a public/product liability policy (which covers third party claims for property damage and personal injury); or under a professional indemnity policy, (which covers third party claims for financial loss).

The problem is, even with both of these policies held; claims could potentially fall between the two – particularly where both policies are held by different insurers.

IT Liability solves this problem, and also in many cases helps to reduce the overall premium by combining both covers into one single policy tailored especially for the needs of IT Professionals including Software Developers, Telecommunication Providers, IT Consultants, Hardware/Software resellers etc.

Therefore in answer to the initial question, an IT Liability policy is actually much more than PI under a different name – it’s public and products liability and Professional Indemnity cover combined and in most cases it works out much cheaper than if you were to buy both policies separately.

To arrange an IT Liability Policy, or simply find out more you can contact the Professional Risks team at Coverforce Insurance Brokers on 02 8814 7777, or complete a quote request online here.

IMPORTANT: General Advice Warning General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness. Consider our disclosure documents, which include our FSG and Product Disclosure Statements PDS) for some products.

Better Staff anyone?

In the current job market, attracting and retaining quality skilled staff is becoming an increasingly difficult task. Those few great employees that are out there looking for employment know their worth and as a consequence interviews are becoming much more of a two way process than ever before. Gone are the days when an annual pay review was all that was required to keep staff happy, these days you need to offer something extra to attract the cream of the crop.

Whilst increasing the pay offered may get new employees through the door initially, it doesn’t really go a long way to differentiate you as an employer of choice.

To avoid tripling your wage bill, it might be worthwhile to think outside the square and consider offering alternative benefits to both your current and would-be employees.

There are two options you may not have considered, that could help to set you apart in the job market as an employer of choice, they are NEST and Group Income Protection Insurance.

NEST

National Entitlement Security Trust (NEST) is a not-for-profit industry trust that secures both yours and your employees entitlements, so that in the event of your company not having the capacity to pay, all benefits owing will still be paid out in full. By participating in NEST employers demonstrate their integrity and genuinely high regard for the security of their employees entitlements.  

Any type of non-superannuation entitlement can be paid into NEST, the most common being; Annual Leave, Long Service Leave, Productivity Payments and Sick Leave. The best part about NEST for employers is that there are no fees, and great tax benefits. This one’s a “win, win” really.

Group Income Protection

The second possibility is Group Income Protection Insurance. Group Income Protection Insurance (also known as Group Risk and Group Salary Continuance Insurance) is a low cost insurance cover, that is taken out in addition to your existing workers compensation cover.

Group Income Protection Insurance provides your valued employees with accidental injury and optional sickness cover - both in and out of the workplace 24 hours per day, 7 days per week, anywhere in the world.

Providing your employees with these kind of benefits shows your sincerity and promotes employee loyalty – not to mention gives you a great dose of that warm fuzzy feeling.

To find out more about NEST or Group Income Protection Insurance you can contact Coverforce on 1-3000-COVER or visit our website.

IMPORTANT: General Advice Warning General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness. Consider our disclosure documents, which include our FSG and Product Disclosure Statements PDS) for some products.

Insurance for Pubs and Hotels

Industry Insider: Patrick (Pat) Walsh

Hi Pat, you’ve been an Insurance Broker since 1964, how much of that time has been devoted to working with Pubs and Hotels?

The lot of it – nearly 47 years now.

Wow!  So, over the last 47 years in the industry, what have been the most significant changes?

The industry has changed dramatically since I began. Probably the biggest catalyst for change was the introduction of Poker Machines and Restaurants into local pubs and hotels. It wasn’t simply the fact that they were popping up in nearly every pub and hotel you visited; it was the steep rise in the income of these businesses, which in turn, allowed them to greatly improve the decor, entertainment and security of their venues turning them into places the general population actually wanted to be.

So over a relatively short period of time, places that used to be quite seedy, rough and very male dominated, began to see their customers bringing along their girlfriends or wives. Then of course it wasn’t long before kids meals were on menus in the restaurants and there were play parks were being built in beer gardens. This really was really quite a radical change.

Amazing! So how did this change affect the insurance industry?

Well as a result premiums went up of course and so those providing insurance broking to pubs and hotels benefited with higher commissions. Most of this increase was relative, simply due to the fact that the values of the property insured had gone up, and the insured profits were much higher. 
 

As a publican in this day and age what should you be insured for?

As a rule I prefer to meet with pub or hotel owners to assess their individual risks prior to making personalised insurance recommendations. However, generally speaking, to protect your average Pub/hotel business adequately, you really should have the following policies in place:

Industrial Special Risks

An industrial special risks policy can cover a number of risks depending on the options selected – yours should at least cover you for;

• Fire
• Loss and/or damage to buildings, contents and stock, unregistered vehicles and the property of directors and employees
• Business Interruption: Loss of profits, revenue and/or increased expenses caused by damage to insured property and also by contingent damage to property at the premises of suppliers, customers and utilities and extra costs for re-instatement, re-writing of records and professional fees
• Burglary, theft of money and stock/contents
• Accidental damage
• Removal of debris

Public Liability

Your pub/hotel has a duty of care to the public. In a pub/hotel environment where alcohol and entertainment such as live bands/nightclubs are present Public Liability proves to be one of, if not, the most important policy you will hold.

A quality Public Liability policy should provide the following cover for all your business activities:

• Provision and co-ordination of a defence from claims made against your business
• where your business is deemed negligent provision for payment of costs and damages including compensation for bodily injury or property damage that are awarded against you.

Management Liability

A management liability should cover the directors and officers for:

• Representation costs where a director or officer is legally required to attend an inquiry or investigation relating to the affairs of the corporation
• Legal costs and expenses in the defence and investigation of a Directors & Officers claim
• Any compensation required to be paid by the insured in order to dispose of a directors and officers claim.
• Claims that can be brought against Directors and Officers are too numerous to list but they include things like wrongful dismissal, wrongful failure to employ or promote, harassment of employees, claims from statutory bodies and claims from the corporation itself (ie. From a liquidator on behalf of the company alleging insolvent trading).

A management liability policy should also cover the business against:

• Theft by employees (Fidelity guarantee)
• Directors and Officers liability claims
• Unfair dismissal and sexual harassment claims
• Representation costs in respect of an occupational health and safety investigation
• Then, there are also Workers Compensation, Machinery Breakdown (Motor Burnout) and Food Spoilage which are all pretty self explanatory.

There are so many different risks to cover, what can business owners do to keep their insurance costs down?

• To reduce insurance costs your business should take steps to proactively reduce the risk of a claim, therefore the insurer will assess you as a lower risk and consequently provide a lower premium. Some examples of steps you can take include:
• Installing time delay safes to hold any cash on site
• Installing fire alarms, smoke detectors, fire sprinklers and having an up to date and practiced emergency evacuation plan.
• Installing Back to Base alarm systems and providing panic buttons in case of emergency situations.
• Providing security guards both within your venue and on the outside.

There are also other factors that can influence your premiums these include:

• Having major entertainment like a popular bands performing live, or running a nightclub within your venue, will increase your public liability insurance costs.
• a poor claims history, as this makes you appear as a higher risk to the insurer.

Are there any common traps you find business owners tend to fall into when it comes to insuring their Pub/Hotel?

Probably the most common issue I come across is underinsuring for Business Interruption (Loss of Profits).  This insurance forms a part of your Industrial Special Risks policy and covers you in the case of specified events like fire, explosion, earthquake etc. for the profits you lose while you are getting your business back up and running.

Most people will have this cover included in their Industrial Special Risks Insurance Policy, but the business owner has the option of specifying a length of time this cover will pay for, and what I often come across is people who have covered themselves against lost profits for maximum periods of 12 months or even less not believing that they could possibly be down for any longer.

If you think about this seriously, should your venue burn to the ground, how long would it take you to:

• have it inspected (by Arson Squad etc.)
• cleanup site and remove the debris
• have new plans drawn up for the new building by an architect
• submit plans to council
• gain approval (generally after a number of revisions)
• engage a builder
• completely fit out and furnish your venue ( including: kitchens, bathrooms, air conditioning, security and alarm systems etc), and then
• have everything including your staff ready re-open?

In my experience with clients who have been through these situations in the past, anything under 18 months is not realistic. I will generally recommend 2 years worth of cover to all my clients. 

Thanks for your time Pat – lastly, how can people get in touch with you for more information?
 

They can contact myself (Pat Walsh) or another of my colleagues Nathan Brown, who is also an experienced Insurance Broker in the Pub/Hotel industry, at Coverforce Insurance Broking on 02 8814 4753.


IMPORTANT: General Advice Warning
General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness. Consider our disclosure documents, which include our FSG and Product Disclosure Statements PDS) for some products.