Disability

Protecting against loss of income when the insured is unable to work due to sickness or accident, this type of cover varies considerably between regional markets. Disability cover is sold individually, bundled with pensions, life and other policies and also through companies offering bulk policies. Policies can also offer additional benefits including mental health support or cover for incidental costs such as adapting accommodation for changed circumstances. Take-up is usually strong in markets where it is used to supplement social security provision and is often a standard part of typical employee benefit schemes.

Also known as income protection or salary continuance insurance, what do we actually mean by disability in terms of life and health insurance? Does it mean the inability to perform your own occupation, or does it mean the inability to do any occupation reasonably suited by education, training and experience or even any paid job at all? Other characteristics can include the length of time before the benefit kicks in, the duration of the benefit (a few years, until retirement or even lifelong), the amount of benefit and rating factors such as age, gender, job.

Furthermore, the market is also influenced by a wide range of external variables, including changes to social security provision, unemployment rates, and broader trends in the local market and economy, so claims experience on products with a disability exposure can be volatile. Such products also carry a higher risk of anti-selection than traditional life insurance and these combined factors can lead to significant losses for insurers if these potential risks have not been well assessed. Poorly devised terms and conditions also may lead to lengthy court procedures between insurers and claimants.

Thanks to our global perspective on disability and our detailed local knowledge, Hannover Re can offer support and advice for all these questions.

We have been working on solutions which seek to mitigate these factors – and many of these lie in advanced digital resources, such as our automated underwriting systems, which enable access to richer data, as well as in offsetting risk by offering opportunities for cross selling and encouraging purchase among younger consumers.

A frequent key issue is getting the claimant back into work – the longer a claimant stays off work, the harder it becomes to find their way back. The rise of insurtech solutions, such as those found in our hr | equarium service, is proving useful in the return-to-work process, offering a range of technology-based rehabilitation, preventative and physical activity offerings.