07 Nov 2022
Why accident and health insurance is critical to building a resilient workplace

Why accident and health insurance is critical to building a resilient workplace

This article was first published in February 2018 and has been updated.

  • Most of Australia’s workforce would struggle financially if they couldn’t earn an income
  • With low unemployment, it’s becoming increasingly challenging for businesses to retain staff
  • Personal accident and illness insurance, including a structured back-to-work program, can help employers create a desirable workplace, increase productivity, and minimise disruption caused by absences.

As both individuals and businesses, our ability to be resilient to the unexpected has been essential for our survival, whether it be a global pandemic, supply chain challenges or sudden changes to our lives.

From a business perspective, processes can be created to deal with change. But, businesses are only as strong as their people, and accidents and health challenges will always happen to some extent, regardless of the mitigation measures we put in place.

Of course, injury and illness come with significant risk for the people affected and the businesses that employ them – which is why accident and health insurance is a vital component of a business’s ‘resilience toolkit’.

It can be incredibly important for employees, too.

How do employees cope financially if illness or injury means they can’t work?

The risk of serious illness is a fact of life – and accidents happen too. And when they do, people are often faced with being unable to work while having to pay out-of-pocket expenses for major medical treatment.

This can cause huge problems for both the affected employees and the businesses they work for.

Australia has a growing wealth disparity – the top 20 per cent of income earners account for 48 per cent of overall income available in the country.

The situation we find ourselves in is people aged 44 and under, who make up a significant portion of the workforce, aren’t asset rich – meaning they can’t convert assets to cash in times of need.

A recent survey found 44 per cent of respondents have less than a month’s worth of money saved, while another survey found 50 per cent of Australians with cancer are more than $5,000 out of pocket.

The same issue applies to people who suffer injuries – being unable to work for any period of time can be catastrophic from a financial perspective.

“Unfortunately, the challenges don’t just stop at current costs,” says Sharron Sykes, Accident & Health Underwriting Manager at QBE.

“Health costs are outpacing wage growth, inflationary pressures will continue, delays in accessing surgery are increasing, and there are warnings about Medicare being unable to meet demand.

“The compounding effect of the delay and inflation adds to the financial stress of the person suffering injury or ill health.”

And this can significantly impact lifestyle, career paths and employment in the event of injury or illness.

Why employees’ financial health is an employer’s concern

It’s tempting for businesses to label people’s ability to financially manage in the event of illness or injury as an indirect concern at best. After all, an employee’s finances are their personal business.

However, a PwC survey found that financial stress is a cause of major distraction at work. And, with key organisational metrics such as productivity, staff retention and physical health directly impacting the bottom line, it’s becoming increasingly important for employers to offer practical help to their employees in areas like financial wellness.

While financial literacy programs demonstrate an investment into employees’ wellbeing, it’s a medium to long-term strategy – and relies completely on those employees acting on, or being in a position to act on, the information shared.

But it’s something employees want. Another survey by PwC found financial support was among the ‘wellbeing’ benefits that employees prioritise – a category which came second only to remuneration.

How employers can strengthen that safety net

Of course, as well as those individuals creating their own financial safety nets, insurance has a role to play too.

A survey by Swiss Re, however, found that only 40 per cent of respondents had personal accident insurance, while just 13 per cent had income protection insurance. The number of lives insured by the Australian life insurance market, meanwhile, has decreased by 23 per cent in the past two years.

“The shrinkage is largely attributed to price increases and regulation changes,” says Sykes.

“Group Life is relatively stable, so this suggests financial pressure is a key driver for individuals, who are dropping their cover. Swiss Re also commented that 14 per cent of its Asia-Pacific respondent pool will sacrifice life insurance when under financial pressure.”

A new expectation

It’s ‘perfect storm’ territory: people don’t have enough money to cope if they can’t work, and reduce or cancel insurance policies to save each month. Then they carry that worry and stress into the workplace, which results in reduced productivity, and potentially leads to increased health risks.

A female occupational therapist holding leg and foot of a male patient with a bandage in his ankle.But from a business’s perspective, some control can be taken – and there’s an increasing expectation to do so.

Environmental, social and governance (ESG) goals are a major part of every business’s strategy – investors pay keen attention and employees, customers, and clients are increasingly aware of how the company is acting.

The social aspect here is vitally important – and Andrew Michell, Accident & Health Broker Strategy Manager at QBE, says employees want their employers to contribute to enriching their life experience.

“How a company manages its relationships with its workforce is one of the key social central questions investors are looking at in 2022. A good social environment within a company leads to stable conditions and gives confidence to the company’s results.

“ESG-focused employers with highly satisfied employees score 14 per cent higher on ESG performance than average global employers. Satisfied employees work harder, stay longer, and seek to produce better results for those organisations with higher ESG scores.”

And, with low unemployment rates resulting in the war on talent, it’s important employers get this part of the value equation right.

How businesses can create meaningful value for employees

Part of that value equation can come in the form of insurance, with employers providing cover – reducing inequalities between employees who can and can’t afford their own policies, and mitigating the financial consequences of injury or illness.

By offering personal accident and illness insurance company-wide, a business can reap significant benefits. After all, while workers compensation insurance will cover injuries sustained at work, illnesses or injuries that occur through out-of-work activities are a huge potential risk.

Sykes says, “If disablement and return to work are managed as part of an insurance claim, the claim manager has oversight on their disablement and provides a person-centred focus, with the goal of returning them to their pre-disability position – that is, successfully returning to work.

“This is an important benefit for leisure time claims, managing absenteeism and providing the same rehabilitation opportunities as those on a worker’s compensation claim. It also reduces the chance of an at-work injury on return, by appropriately managing and supporting the return to work.

“If we reduce the risk by supporting the employee in their recovery and return to work through our claims response, we create a more resilient industry.”

Sykes continues, “Research shows after a 20-day absence there’s a 70 per cent likelihood of the employee successfully returning to work. If that absence extends to 45 days the likelihood decreases to 50 per cent, after 70 days that possibility drops to 35 per cent. And there’s plenty of research on the health benefits of work to aid recovery.

“When all employees have the same opportunities to return to work, not just from a workplace injury, there are multiple benefits for all parties.”

Ultimately, by ensuring employees aren’t suffering financial stress when faced with illness or injury, they can access the treatment they need and won’t be placed under the mental stress they’d otherwise experience.

By supporting employees from an insurance perspective and helping them return to work more quickly and successfully, businesses can help create an environment and culture that people want to be part of.

And that’s critically important in today’s increasingly competitive job market.

Changing employment challenges

The Australian Chamber of Commerce identified a shortage of skills and labour as being the most pressing challenge facing businesses today. And the Australian Human Resources Institute suggests the cost of onboarding new staff has more than doubled in the past 12 months, currently sitting at $23,860 – and taking an average of 40 days to get a new employee onboarded successfully.

By creating that desirable employment environment, which visibly and demonstrably looks after employees’ wellbeing, businesses are better positioned to help employees be productive, stay with the company, and – when they do suffer from illness or injury – get back to the workforce in a timely and well-structured manner.

Related article: Accident and Health: Protecting modern employers and their people 24/7

To find out more about how QBE can help businesses manage employee accidents and injuries, talk to one of our workplace specialists today.

Find out more about QBE’s Group Personal Accident and Sickness Insurance offering.


1 https://mccrindle.com.au/article/australias-income-and-wealth-distribution/#:~:text=The%20average%20household%20gross%20income,the%20other%2048%25%20of%20earnings
2 https://mccrindle.com.au/article/australias-income-and-wealth-distribution
3 https://www.finder.com.au/savings-account-statistics
4 https://chf.org.au/
5 https://www.pwc.com/us/en/services/consulting/business-transformation/library/employee-financial-wellness-survey.html
6 https://www.pwc.com.au/important-problems/future-of-work/what-workers-want-report.pdf
7 https://www.swissre.com/institute/research/topics-and-risk-dialogues/health-and-longevity/expertise-publication-covid-19-consumer-survey-2021-asia-pacific.html
8 https://kpmg.com/au/en/home/insights.html
9 https://www.comcare.gov.au/about/forms-publications/documents/publications/rehabilitation/return-to-work-information-sheet.pdf
10 https://www.australianchamber.com.au/wp-content/uploads/2022/03/ACCI-Overcoming-Australias-Labour-Shortages-24-March-2022-Final.pdf
11 https://www.hrmonline.com.au/section/featured/cost-of-hiring-new-employee/

This advice is general in nature and has been prepared without taking into account your objectives, financial situation or needs and may not be right for you. You must decide whether or not it is appropriate, in light of your own circumstances, to act on this advice. To decide if QBE’s products are right for you, please ensure you obtain and consider the Policy Wording or Product Disclosure Statements and Target Market Determinations, available online at QBE.com/au. Insurance issued and underwritten by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545).

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