It has been said that insurance and innovation are found together only in the dictionary. However, insurance has entered a period of increasing change; the World Economic Forum has nominated it as the sector of financial services that is most vulnerable to disruption.
Change in insurance is being enabled by technology; altering the nature of risk and how it is priced; and spawning competition at parts of the insurance value chain where none previously existed.
Consumers are dissatisfied with traditional insurers. Common complaints include slow claims processes, increasing premiums, risks that are hard to place and a feeling of powerlessness.
While the disrupters can’t replace all types of insurance, they can be used in some niche areas like personal products, specific industry and community groups. Some start-ups have already used this structure to offer a true B2B alternative.
Innovators, like Employsure have introduced a discretionary mutual. Employsure Protect
is a discretionary protection cover that, “challenged the traditional insurance model, allowing us to enhance client value with increased benefits,” says Ian Mundy, Head of Mutual at Employsure.
Mundy explains the difference between discretionary mutuals and traditional insurance: “It can create a real B2B community where members join together for a common purpose. Together they fund their own cover and pay claims.”
“Members make contributions not premiums. These are pooled together to pay claims, and the professional expenses of running the mutual. Discretionary mutuals also have the advantage of giving their members more control over their protection coverage, pricing and the payment of claims.”
Employsure Protect was established in Australia by Employsure for its clients – small and medium businesses to whom the company provides comprehensive support and advice for the management of employment relations and workplace health and safety compliance, disputes and related matters.
As part of its service to its clients, Employsure had operated a scheme to provide insurance to its 24,000 clients in Australia and New Zealand for employment litigation matters, defence costs and penalties. With the growth of its business, Employsure saw an opportunity to enhance service and benefits for its clients by establishing a mutual where Members’ interests are front and centre. With effective risk management already being delivered through Employsure’s core services this made perfect sense.
Employsure partnered with an independent mutual manager to jointly establish and manage the Mutual. Employsure will continue to handle all client engagement including front-line claims, whilst the Manager will provide claims support and manage all other administration aspects of the mutual.
Though the Mutual only recently commenced operation, membership and protection take-up has been extraordinary. “We believe our Members will value the involvement of fellow small business owners on the Board of the Mutual and the way in which the Mutual puts Members first.”
Discretionary mutuals also have the advantage of giving their members more control over their coverage, pricing and the payment of claims. “We wanted to challenge the traditional model of shareholder owned insurance companies and aggregate our 24,000 small business members contributions to fund claims and give members greater flexibility and ownership.”
Mutuals don’t exist to generate profits for shareholders, so any surplus or profit is used to benefit the B2B community. At year-end a surplus can be used to fund risk management initiatives, be carried forward or even subsidise future contributions. As long as the funds are used for the common benefit of the group and in line with the objects of its constitution, the Mutual can use them in any way the Members want.
In addition to the flexibility benefits, there’s been significant cutback in the average claim turnaround. Mundy says, “now, the average claim turnaround has been reduced by fifty per cent which is extremely pleasing for clients who generally want the nuisance of a long claim resolved quickly to minimise distraction from their business.”
“Employsure Protect ensures our clients are put first in all transactions.”
“We are aiming to cut down the cost of premiums by 15%, as our clients enjoy the benefit of a subscription model where their cover is based on a month to month fee. Cover on the go is proving to be an enormous disrupter to traditional insurance.”
“Being as flexible as we can for our member is our focus.”
While Employsure Protect has been rolled out as an innovative Australian business to business mutual, remaining agile is essential to its ongoing success, according to Mundy. Since launch, the mutual has already been adapted in response to client feedback.
“The secret of this product will be continuous improvement, additional products, and system upgrades. We’re continuing to look at how best to integrate ourselves into the member’s world and their business.”
Employsure is Australia's largest workplace relations specialists firm, with over 24,000 small business clients. Each year, Employsure takes more than 267,000 calls from employers seeking assistance. For more information visit www.employsure.com.au