.jpg)
IB talked to AHI’s Chris McDowell about the importance of personal accident and sickness insurance and how its products are addressing a growing need for this coverage among SMEs
Most Australian businesses that employ workers must obtain workers’ compensation insurance, although “the rules and requirements vary across states,” says Chris McDowell, National Underwriting Manager for Accident and Health International.
However, non-employing businesses such as sole traders, proprietors, members of partnerships and contractors are generally ineligible for workers’ compensation insurance and therefore need to consider personal accident or group personal accident insurance.
“According to the Australian Bureau of Statistics, at the end of 2016–17, there were nearly 1.5m non-employing businesses in Australia,” McDowell says. “So there are a vast number of small and medium-sized enterprises who are not covered by workers’ compensation policies.” In addition, a recent National Australia Bank white paper revealed that SMEs now contribute over 55% of Australia’s GDP.
“When key personnel in SMEs are involved in an accident or experience a serious health issue, there can be serious impacts to their income and their family,” McDowell says. “There can also be flow-on effects throughout the community. Personal accident insurance works to protect the policyholder’s income and what matters most to them, as well as providing the support that enables them to get back to what they do best as quickly as possible.”
Personal accident insurance is designed to cover an insured’s income if they are temporarily unable to work due to an accident, and “you can also choose to include cover for illnesses as well, with personal accident and sickness insurance, which would pay you the same benefit if you fell ill and were unable to earn your regular income,” McDowell says.
“Companies can also consider group personal accident insurance,” he adds. “GPA can cover employees 24 hours a day, seven days a week, meaning it covers staff outside of work hours. GPA can also provide additional coverage to act as a top-up for workers’ compensation policies. It can also be compulsory in enterprise bargaining agreements across all industry sectors.”
Claims activity
In terms of the most common claims AHI sees for personal accident insurance, McDowell says musculoskeletal or upper extremity injuries top the list.
“Over the last five years, AHI has seen an average of 13% of claims benefits paid relating to accidents resulting in death, which highlights the importance of SMEs taking out personal accident policies to ensure their families are protected if the worst occurs,” he says.
“As the statistics show, mental illness is a fast-growing problem, so brokers should be asking if their clients are covered” - Chris McDowell, Accident and Health International
McDowell adds that the large majority of the illness claims AHI sees come from cardiac or cancer-related illnesses. “Year-on-year, these illness claims amount to an average of 25% of AHI’s claims,” he says. In 2017,
AHI’s data showed that the average time off work for personal accident and/ or sickness insurance claims was 29 weeks. However, many claims ran for up to two years.
“The impact of these accidents and illnesses on the claimants, who are often the sole person running their business and also often the breadwinner in their family, can be highly detrimental,” McDowell says. “If the right insurance policies aren’t in place, both the business and the individual owner or director can quickly find themselves in financial stress.
Dealing with mental illness
Statistics from the Australian government’s Department of Health show that, each year, approximately one in five Australians will be affected by mental illness.
“Mental illnesses are the third leading cause of disability burden in Australia, accounting for an estimated 27% of the total years lost due to disability,” McDowell says.
He also cites a statistic from the Black Dog Institute, which found that mental illness is now the leading cause of sickness absence and long-term work incapacity in Australia.
“The total workplace cost of depression in any one year is estimated to be $8,025 per affected individual, with an estimated three to four days of work lost per month for each employee experiencing depression,” McDowell says. “Workers’ compensation claims for stress-related mental disorders have increased to $200m per year. “
AHI has responded to changing community expectations by removing mental health exclusions across its entire suite of policy wordings,” McDowell adds. “This is a marketleading change, and as the statistics show, mental illness is a fast-growing problem, so brokers should be asking if their clients are covered.”
McDowell also mentions a new prevention initiative AHI has introduced.
“AHI’s individual personal accident policyholders and their immediate family members can benefit from specialist medical advice at no cost, regardless of whether they’re making a claim,” he says. “An exclusive partnership between AHI and Best Doctors means that new and renewing policyholders now have access to more than 50,000 world-leading medical specialists, who are able to provide a second opinion on medical diagnoses or treatment.
“Should a policyholder or an immediate family member suffer an injury, illness or medical condition, regardless of whether they’re making a claim, Best Doctors can provide them and their treating doctor with insights and expertise from a leading international expert in their condition,” he adds.
“Personal accident and group personal accident policies provide peace of mind to employers that their staff are covered when they’re not on the clock. It’s an indicator that an employer is taking their duty of care seriously” - Chris McDowell, Accident and Health International
McDowell says policyholders and their immediate family members can receive clarification on a diagnosis, a second opinion on the best possible treatment plan, advice about a medical condition, answers to everyday medical questions and referrals to local specialists.
“More than 10% of Best Doctors’ case reviews see a change in diagnosis, so this highlights the value in receiving a second opinion when a policyholder is diagnosed with a serious illness or faces a long road to recovery after an accident,” he says. “Since we’ve launched our partnership with Best Doctors, we’ve already seen positive patient outcomes and a steady growth in our policyholders seeking secondary advice.”
Integral partnerships
When it comes to working with service providers, McDowell says AHI acknowledges that successful outcomes cannot always be managed by the underwriter alone.
“Whilst numerous claims will only involve a simple ‘dollar transfer’ as part of the financial settlement process, more complex claims will often require involvement of third-party agencies to achieve successful claim outcomes,” he says. “Some of the different providers we regularly work with in the management of personal accident and sickness claims include return-to-work coordinators, who have an understanding of the actual workplace; rehabilitation providers, who can provide external ‘allied health capital’ to assist in managing and driving return-to-work goals and outcomes; and independent medical specialists, who have the ability to approach injury management in a facilitative rather than an adversarial approach.”
There are also some developments on the legislative landscape that brokers placing personal accident risk should keep in mind. McDowell says AHI is seeing the impact of the legislative change in New South Wales that removed journey cover from workers’ compensation policies.
“For brokers, this is an important opportunity to discuss this gap in coverage with their clients,” he says. “Personal accident and group personal accident policies provide peace of mind to employers that their staff are covered when they’re not on the clock. It’s an indication that an employer is taking their duty of care seriously and can also be articulated during the hiring process as an additional benefit of being employed by that company.”
