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Mental health key driver of surge in accident and health insurance cover

Mental health key driver of surge in accident and health insurance cover
29-09-22 / Tommy Jackson

Mental health key driver of surge in accident and health insurance cover

Johannesburg - The effects of the COVID-19 pandemic (and subsequent lockdown regulations) on the mental wellbeing of South African workers has been well documented. Now, months after the lifting of lockdown restrictions, the aftershocks of the pandemic and its impact on workplace operations are the main drivers of an increase in demand for commercial accident and health (A&H) insurance policies. This trend is a clear indicator of the correlation between poor employee morale and increased A&H risk exposures.

This was one of the key insights to emerge from the 2022 Specialist Risk Review published by SHA. Commenting on the significance of this finding is Dave Honeyman, SHA’s Business Head of Accident and Health, who explains that: “the results of the review have been illustrative of the fact that conditions such as anxiety, depression and stress related conditions increase the probability of accidents at work or elsewhere. The impact of poor mental health amongst employees therefore has highly apparent and direct repercussions for employers.”

More than 50% of respondents to the review reported that their employees had experienced anxiety and depression over the last year. While this trend did not translate into a rise in A&H claims for SHA, it was found to be a major contributor to ongoing demand for this type of cover.

Investigations into the reasons behind diminished morale and diminished mental health in businesses across the country revealed that the negative experiences of employees were compounded by businesses’ responses to the economic realities of the pandemic.

The review found that, in an attempt to navigate the difficulties and risks posed by the pandemic, many businesses reduced or cancelled bonuses and incentives (35% of respondents), cut salaries (33%), introduced longer working hours (25%) and reduced their staff complement, likely via retrenchments and redundancies (24%). The knock-on effect of these sudden and unexpected developments had a profoundly negative impact on employee morale.

However, Honeyman believes that in the wake of the pandemic, as conditions in the workplace return to a more favourable place, the tide is slowly turning. As he continues: “the review found that some improvement in the mental state of South African employees was already evident in 2021, when compared to the previous year. And with client payrolls now returning to pre-pandemic levels (after contracting by 25% in 2020), we forecast that evidence of the toll of the pandemic on workplaces is gradually diminishing.”

After a considerable reduction, due to fewer sporting injuries and motor vehicle accidents at the height of the pandemic in 2020, the upward trend in A&H claims has resumed. With accidents related to mental health issues on the steady decrease, several other factors will continue to influence claim volumes heading into 2022. These include a notable uptick in motor accidents and crime-related incidents.

These developments are indicative of an ever-changing and evolving risk landscape – one in which short-term A&H cover for South African businesses will continue to play a key role in risk management strategies across sectors.

As Honeyman concludes: “considering that in today’s business environment, employees remain with an employer for an average of three to five years, we expect to see more companies choosing short-term A&H cover as a way of adapting to South Africa’s changing socioeconomic environment and protecting their businesses from new and emerging risks.”

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