HR and Insurance Brokerage

November 18, 2022
3:54 pm

HR and Insurance Brokerage

teamyoa

Ever wondered what Insurance brokers do? There’s been a lot of misconception about the role Insurance brokers play in the insurance value chain. In this e-book, we’ll explore the need to have an Insurance Broker and the value they bring on board. Some scenarios clearly outline the operational functions of Insurance Brokers in ensuring adequate coverage in employee benefits policies, and we hope to enumerate them here.

Human Resource and Employee Benefit

It is important to accentuate that most insurance policies are technical and would require an expert’s eye to ascertain whether they adequately fit the purpose for which they are meant or not. Undoubtedly, every organization’s staff is integral to the sustainable growth and development of the organization, and that is why their welfare is also a priority for employers. As an HR professional, you are saddled with the responsibility of ensuring that your staff is happy. The staff put in a lot of work and expect their employers to reward them with remunerations, quality life, and health protection. The covers that are relevant for ensuring staff welfare are:

Group Life Assurance (GLA) – Here, the law mandates that any organization operating with three or more staff must have a Group Life Insurance Policy for the staff. This covers each staff, where their beneficiary gets a financial sum assured and any other benefit in the event of death of the staff.
Health Insurance – via a Health Maintenance Organization (HMO), organizations must provide health coverage for their staff and state what illnesses are covered. Even though this isn’t mandatory, it is just as important. Healthy staff, Happy staff, as the saying goes.
Group Personal Accident (GPA) – Accidents leading to injuries can occur on the job; GPA covers these kinds of events. This cover offers a 24hr coverage whether at work or after work hours.

Insurance Scenarios in Nigeria

Another responsibility of the HR department is finding insurance covers that adequately cover their staff’s various job descriptions, address organizations’ peculiarities, and pay out claims without any hassles. This is where brokers come in. Take a second to think about this – If you have a legal case, would you represent yourself in court?

No, you wouldn’t; you’d get a solicitor. So why do you think Insurance doesn’t need professional advice as well? Well, it certainly does. An insurance broker’s responsibility is to ensure that its clients get the best from the insurance policies sold. They ensure that the relevant and adequate covers are bought, and they go ahead to ensure that the policy is broken down in understandable formats for the Policyholder/representative.

An insurance broker is your guide in ensuring a seamless staff welfare administration. Below is a highlight of the value that Insurance Brokers can bring in helping HR professionals manage their staff risk:

Reduce Insurance Cost – Contrary to the perception that a broker (a middleman) will raise the cost, the cost of insurance can even be substantially cut down when using a broker. Brokers get the best rates on your behalf because they understand the intricacies of the industry and can find the friendliest of rates.
Give Best Advisory – Insurance brokers are objective and impartial in advising on necessary policies. They clearly outline all the dotted lines and fine prints. Brokers simplify policies for you.
Guide Claims Settlement – Insurance brokers will guide you through every step of the way when processing a claim. Because they would have brokered your policy, it also becomes their responsibility to ensure that you get your full claim settlement.
Optimize Renewals – Insurance Brokers intermittently carry out risk audits to update your risk profile before you renew your policy. This process ensures that you are adequately covered while your business or personal life undergoes several changes.
Client Management – Insurance brokers make conscious efforts to stay connected to clients to ensure an optimum insurance experience.

Claims Settlement in Nigeria

Nigeria’s insurance industry has a negative perception of claims being paid. However, this isn’t exactly the case because, in 2019, Insurance paid out claims of over N330 Billion (a 31% increase from the previous year). And with experts and industry forecasts, this trend will likely increase in the coming years. Our findings have highlighted that claims not settled were most likely due to poor understanding of the policy on the policy holders’ part and inappropriate or inadequate documentation.

Both are the things brokers will help with. Another role an Insurance broker will play concerning claim settlement is soliciting on behalf of the policyholder with the insurance company. More often than not, in some cases, insurance companies consider their relationship with brokers and can waive some things in everyone’s interest for claims to be paid.

A report from Nigerian Insurance Association (NIA) in 2019 highlighted that Insurance brokers supply 90% of the premium that insurance companies in Nigeria get, so it’s easy to imagine how strong that relationship with brokers is. Let us put this Insurance broker’ strength into perspective. Below, you will find a few real-life scenarios of how insurance brokers help and advise clients on navigating their risk issues.

Insurance Scenarios in Nigeria

Employees Liability/ Workmen Compensation Scenario

A set of workmen suffered an accident while carrying out their operation at a mill. One of the staff was injured by an operating tool which his colleague forgot to turn off. The operating tool caught the left hand of the staff and crushed some of his fingers. The injured staff was immediately rushed to the hospital for treatment, where it was confirmed that he would need immediate surgery, and this was done,

The company immediately lodged a claim with their Insurers, who inspected its premises, the site of the accident, and how it occurred. Upon full documentation, the Insurers rejected that claim that the accident was caused by the negligence of a fellow staff who was also working at the same site. They also cited that had the staff been wearing his protective gear, the loss might not have been serious, and he might have needed surgeries at all.

The company contacted us to assist. We immediately approached the Insurers and convinced them that the negligence of the fellow staff was not grounds to reject that claim, nor was the failure of the staff to wear his protective gear. We reminded them of the provision of the Compensation Acts and its rules for the protection of all workmen. The Insurer agreed and duly compensated that staff and the company.

Group Personal accident Scenario

While on a family trip, key staff of a company was involved in a motor car accident. The Staff had to rush to the hospital and incur huge costs for treatment. The family immediately contacted their company, which reached out to the insurance company for compensation. After reviewing the documents, the insurance company stated that the accident occurred while he was away from work and his home and was nowhere working in the company’s interest. Thus, their policy was not engaged and was not liable for compensation.

After reaching out to us for advice, we reviewed the policy and discovered that it was a Group personal accident, not a Workmen / Employer liability policy. Thus, the insurance coverage should be 24 hours, irrespective of the staff’s location. Subsequent meetings with the insurance company were held, and they agreed and finally compensated the company and the injured staff.

What is the Difference between Group Life Insurance and NSIFT?

The first difference between GLI and NSIFT is their nature. For one, GLI comes from an employer, whereas NSIFT is a Social Insurance Scheme. Payment upon death situations is also different: here GLI would pay a total sum of several months of salaries while NSIFT would pay it out monthly.

However, they do have similarities in the way that, in essence, they are both mandatory to an extent. Indeed, the Employees Compensation Act has made social insurance with Nigeria Social Insurance Trust Fund (NSITF) compulsory for all staff and employers in the public and private sectors nationwide. And by law, if companies have more than a certain number of staff, they would also need GLI. Which in turn, makes it more expensive for the employer to operate.

Help your employees and their families stay financially protected and better prepared while nurturing and enjoying the benefits of a motivated and productive workforce from within.