Neil Thunström, Head of Personal Accident and Travel, Groupama Insurances, looks at the value of PA cover to businesses in tough economic times, as Groupama launches a PA Toolkit to help advisers and brokers sell the benefits of PA cover.
Personal Accident insurance (PA) is relevant to virtually every business in every sector. It allows businesses to insure their people in the same way they insure their plant, machinery and vehicles. If these inanimate objects deserve protection, surely the people who manage, operate and use them do too?
But it is in times of economic stress as businesses reduce headcount that this cover really comes to the fore. A smaller team, where each member is proportionately even more important, must be better protected. It’s common sense and simple asset protection.
Yet PA cover is much misunderstood. Yes it can be used as an employee benefit but any claims are paid directly to a business – it is entirely at their discretion how that money is used.
It’s also incredibly flexible. PA cover can be tailored to the precise needs of a business in terms of cover required and budget. There are no rules about the size of the business or the number of employees. And cover can be targeted where it is most required. Some firms choose to cover all employees. Others select the elements of the workforce whose loss would have an immediate and severe impact on the business.
Benefits can be arranged as lump-sum payments in the event of accidental death or injury or as temporary benefits to cover someone being absent from work for a few weeks. Cover can also apply either on a 24- hour basis or on a selected ‘operative time’ basis set by the business.
With claims payable directly to the business they could choose to use the funds to engage temporary staff to cover short term absence, or adapt the premises or buy specialist equipment to allow a disabled colleague back to the workplace. There might be additional recruitment costs to find replacement staff. It could actually be a combination of any of these and more.
It might be hard to imagine but what if the sales team is travelling together to make a key presentation, or senior managers are flying to a conference? A PA policy can take such risks in its stride. The business can also choose the amount of benefit and the length of time for which it will be paid, which affects the premium, allowing it to allocate budget to protect the business against the short-term, long-term or permanent loss of a valuable employee(s).
Of course, the potential of PA as part of a benefits package should not be underestimated. Confirming that the proceeds of a policy will be made available (in full or in part) for the benefit of the employee and his or her family is a valuable employee benefit consideration. It can also help reduce the potential for employers liability claims. And, as PA is a benefits contract, there is no need to establish negligence or breach of duty. This sets it apart from liability covers which can involve a protracted claims process.
Arranging PA cover is very easy and IFAs and brokers really should be selling more of it. It’s very cost effective, highly flexible and extremely valuable protection.
To come back to my original point, businesses automatically understand the importance of insuring their tangible assets against standard perils. But what about the people leading the company, operating the machinery, making the sales, or generally ensuring the smooth running of the firm?
PA Insurance really can make the difference between survival and failure for a business that is struck by misfortune. And believe me. It happens.