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Employee risk – a changing landscape

At a glance

  • From rising pension deficits to an increasingly mobile workforce, companies are exposed to a wide range of employee risks
  • Traditional, siloed approaches to risk management can prevent such risks being managed effectively
  • Zurich is committed to helping companies take a holistic approach to employee risk, and has identified four key areas for businesses to consider

Successful companies recognise that employee risks can have a wide-ranging impact on their business, and understand that a holistic approach to risk management is needed.

In response to this, a number of insurers are now introducing combined life and general insurance offerings and, according to a leading risk-management publication, Zurich is “among the most advanced in this area”.

Zurich has identified four key risk areas that employers should be particularly aware of – pensions risk, employee risk, mergers and acquisitions, and global mobility.

Nick Homer, Zurich’s Group Protection Manager for Corporate Propositions, says: “We see these as four emerging risk areas that employers need to monitor carefully.”

Pensions risk

The management of pensions and benefits has traditionally been the remit of the compensation and benefits team within a firm’s human resources department.

Now, however, with pension deficits rising to record highs, chief financial officers are beginning to take a more hands-on role. Many are now working more closely with benefit managers regarding the purchasing of benefits, scheme implementation and overall strategy.

Nick says: “Pensions risk is one of the biggest exposures on a company’s balance sheet. We can help manage that risk. Zurich offers a wide range of products that can be tailored to fit a company’s needs, from pension trustees liability cover to pension deficit bonds.”

Employee risk

Human resources departments have conventionally held sole responsibility for arranging employee benefits. However, this siloed approach can mean that the wider advantages of certain employee benefits are not always fully realised.

The employer risk landscape is changing significantly”

Nick Homer, Group Protection Manager, Corporate Propositions, Zurich

Income protection is a good example of this. Not only is this cover attractive to employees, in providing a guaranteed income should they fall ill or suffer an injury, but it can also have long-term strategic benefits for the employer.

Nick says: “When we put this cover in place, we ask to be notified fairly swiftly of any long-term absence. Even if the terms of the cover are such that we will not pay out any benefit for the first six months, if we are notified early about absences, we can do things such as offer rehabilitation support where relevant.

“We can also develop a return to work plan, which can address the reason the employee was absent in the first place. If, for example, the absence was as a result of work-related stress, our approach could also go on to mitigate an employers’ liability exposure.”

Mergers and acquisitions

During mergers and acquisitions (M&A) transactions, companies often miss opportunities to make significant efficiency savings on their employee benefits programmes.

Nick says: “Rather than integrate their insurance and pensions solutions, both parties are often just focused on protecting themselves against future liabilities and do not take the time to identify potential savings and other efficiencies that the newly combined business could achieve.”

The M&A insurance and risk services that Zurich can offer include:

  • Consolidation of risk benefits
  • Pension scheme management
  • Mitigating pension scheme funding risks
  • Mitigating trustee/employer risks
  • TUPE (Transfer of Undertakings Protection of Employment) management

Global mobility

More and more companies now manage a globally mobile workforce. While employers must continue to exercise their duty of care for overseas staff, they must also be aware of local requirements in different territories.

In some countries, certain types of cover may not be available, for example. Also, if an employee is working in a foreign country for a prolonged period of time, and paying tax in that country, this may affect their employee benefit entitlement.

Ensuring cover remains appropriate and consistent for a global workforce requires the support of an insurer with a truly global footprint.

Nick says: “Our global presence and knowledge means we have a good understanding of what an appropriate solution is for various territories, and how you can deliver cover for your employees working in different territories.”

Seeing the bigger picture

Zurich is committed to helping customers understand and mitigate their risk exposures.

Nick says: “The employer risk landscape is changing significantly, and customers now require a different approach for the strategic management of those risks.

“Whether you are a risk manager or work in an HR department, we can help you to see the bigger picture and work on a more robust and cost-efficient solution.

“And regardless of who your key touch point is within Zurich, we can make sure you have access to the full range of Zurich offerings.”

For more information please speak with your local Zurich contact.

Image © Getty

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