Becoming An Employer of Choice
Income Protection Gaps (IPGaps) - the reduction in household income as a consequence of serious illness, disability or another severe reason of the primary salary earner - are a rising global challenge. Just a third of people are insured against such a sudden loss of income, according to a study by Zurich Insurance Group, the global insurer, and the Smith School of Enterprise and Environment at the University of Oxford on ‘income protection gaps’ (IPGs).
Societal shifts such as the move away from the ‘job-for-life’ mentality to careers that are often varied, mobile and global in nature have not helped. This change has led to ambiguity around responsibility for Income Protection; is it the concern of individuals, governments or employers?
While most employers are not yet providing income protection — only 13 per cent of employees surveyed said they had been offered it by their company — findings suggest doing so could deliver profound benefits to businesses as well as their staff.
Paolo Marini, Zurich’s Director Global Customer & Distribution Management Corporate Life & Pensions, said: “Our research shows that most people would prefer a benefits package including income protection to higher pay.
“As people work longer, the need for protection is growing. But the gap in protection is also growing due to pressures on state spending and fragmented careers leading employers to show less of a duty of care.
“Companies that take a decision on principle can increasingly stand out, enhancing staff retention, a sense of belonging and company reputation.”
By helping their staff to understand and insure themselves against IPGaps, businesses could improve their ability to recruit and retain talented workers, while happier staff may also increase a firm’s prestige.
International cosmetics company L’Oreal is among those organisations that have been proactive on income protection for their employees.
L’Oreal guarantees worldwide to pay a minimum of 24 months’ salary in the event of death or total and permanent disability.
The coverage is in addition to any social security benefits and L’Oreal’s local operations are expected to align their benefits to those of leading companies wherever market practice is more generous.
This benefit is part of the company’s ‘Share and Care’ programme, which operates across its 67 countries. The programme also includes medical insurance, maternity and paternity benefits and wellbeing.
While benefits packages as broad as L’Oreal’s are clearly well-received by employees, some employers could be missing out on the value that comes from these services because of a lack of awareness. The Zurich-Oxford survey found nearly one in ten workers didn’t know if they had income protection.
L’Oreal addresses this by encouraging regular communication with employees to demystify the details of provisions and ensure they understand their insurance benefits.
“We often hear that employees are any business’s most important asset,” said Mr. Marini, who praised L’Oreal’s example. “Keeping staff committed and engaged can certainly provide an advantage over competitors.”
