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10 Group Insurance Trends and Predictions for 2022

By: Benefits by Design | Tuesday November 30, 2021

It’s that time of year again! It’s time for us to break out our crystal ball, dim the lights, turn on the fog machine, and predict the future of the group insurance industry. We’ve demonstrated our clairvoyance four times before when we predicted the trends and issues for 201820192020, and 2021, and this year shall be no different. 

Let’s peer into the future and attempt to discern what the group insurance trends in 2022, big and small. 

Continued Impacts of COVID-19 

No surprises here, but we wouldn’t be much of a fortune-teller if we didn’t mention them among the group insurance trends in 2022. Employers, employees, Insurers, and Advisors will all need to grapple with this and ponder answers to questions and problems like: 

  • Will employers require a COVID-19 vaccine in order to return to work? 
  • Can employers terminate employees who choose not get vaccinated? 
  • Will work from home be here to stay? Can their workplace accommodate it? 
  • How can employers support employees’ mental health during this time? 
  • Staffing challenges, including acquisition and retention 
  • Are employers effectively using their benefits plan as a recruiting tool?

The impacts of COVID-19 on Canada have touched every sector and the group insurance industry is no different. In fact, many of the ongoing trends and predictions for 2022 can be directly attributed to COVID-19, or at least been exacerbated by it. 

Continued Mental Health Crisis & More Emphasis on Solutions 

Declining mental health was a trend both in 2020 and in 2021, and 2022 group insurance trends are not different.

As we’ve discussed before, the mental health crisis in Canada was a growing problem even before the COVID-19 pandemic. Now, in its wake, it’s becoming even worse. Employees’ mental health will continue to suffer going into 2022 and employer’s will need to prioritize mental health with an emphasis on solutions. 

The Centre for Addiction and Mental Health (CAMH) has five recommendations to governments and decision-makers at organizations to support Canadians’ mental health. 

  • Provide a range of mental health resources, supports, and care 
  • Support and expand mental health services 
  • Prioritize workplace mental health 
  • Invest in the social detriments of health 
  • Commit to a public health approach to alcohol policy 

To deliver on this, employers should seek out support organizations and their resources, like CAMH or Government of Canada, and make resources widely available to employees.  

At the same time, they can expand mental health services, including an Employee Assistance Program (EAP) in a benefits package, and normalize mental health conversations in the workplace. Offer Personal Time Off (PTO) and encourage employees to use it for mental health days as needed — there may still be many employees who do not see this as a “good enough reason” for PTO, but it is. 

Increasing Long Term Disability (LTD) Insurance Incidence Rates 

It’s likely that we will continue to see rising Long Term Disability (LTD) Insurance claims going into 2022. Driving forces for this include mental health stressors, more employees reaching “burnout” stage as the pandemic continues, coupled with additional delays in diagnoses for conditions due to the impact COVID-19 has had on the healthcare system. 

Delays in diagnoses and surgeries translates to slower resolution of claims, leading to an overall greater volume of active claims. We began to see the impact of this in 2021, but we expect to see this problem bubble up and potentially boil over in 2022 as the healthcare system deals with the fallout of COVID-19. 

Lastly, some potential good news! One area that has a large impact on LTD rates are interest rates (this is due to the way reserve funds work). If interest rates rise as expected in 2022, Insurers will be able to use the interest generated from their reserve funds to pay claims, lessening the burden on LTD rates overall. 

Impacts of Inflation and Cost of Service Increases Will be Felt 

Among the most subtle and perhaps infrequently thought-of group insurance trends in 2022, we have inflation.

Canada experienced its highest inflation rate increase in 2021 since February 2003 — 4.7% in October, and 4.4% in September. The cost of services across the board are rising, including healthcare practitioners like dentists, chiropractors, and physicians. It’s worth noting that part of this rise in the cost of services for practitioners may incorporate Personal Protective Equipment (PPE) costs and cleanup, as we predicted last year

The costs of services will likely be impacted by issues within the supply chain. When material costs rise, the costs are often rolled down to the customer. This is something we’re beginning to see with dental and paramedical claims. 

All of this means higher costs of claims and, in time, perhaps tough renewals across the board. Importantly, such increases may be unavoidable, given the trends we’re discussing are industry wide and being felt by pretty much all Insurers and employers in Canada. 

The Rise of High-Cost Drugs Will Continue 

High-cost drugs will continue to impact benefits plan in 2022 as new high-cost drugs hit the market and conditions covered by them expands. A survey by Aon predicts a 7% rise in employer-provided medical benefits costs in Canada, driven in part by these high-cost claims (along with inflation and cost of services mentioned previously). High-cost drugs are appearing on benefits plans more frequently now. In some cases, plans aren’t built to take the hits, leading to challenging renewals.  

With stop-loss charges likely to continue to increase and drug maximums not always being the answer (after all, employees generally need these drugs to manage their conditions), the “answer” to this trend remains unclear. Regardless, it’s an issue that Advisors and employers will need to consider, leaving many to ponder the idea of a national pharmacare system

A focus on plan sustainability over the long-term may help employers weather the storm, as this trend is not something we see disappearing anytime soon. Likewise, cost-effective solutions that prioritize coverage for catastrophic high-cost claims, like our Catastrophic Hybrid Insurance Plan, may see increased interest from employers. 

Competitive Job Market Will Lead to Continued Hiring and Staffing Challenges for Employers 

Many Canadian businesses are struggling to attract and retain talent, with small businesses being among those most impacted. A Maru Public Opinion survey commissioned by ADP Canada and released in November, 2021, had some interesting results: 

  • Almost half (46%) of small business owners say it’s more difficult to find and retain employees than before COVID-19 
  • One-third (33%) of small business owners are currently having trouble finding employees 
  • Higher wages (46%) most often offered to combat challenges in finding and/or retaining employees, with 26% surveyed within this group indicating they have done nothing to address these challenges 

While we agree that higher wages are certainly an avenue towards attracting and retaining top talent, we think there’s another avenue, related to total compensation, that employers should consider in this fight: employee benefits. 

Employers Will Prioritize Benefits and Perks for Employee Retention and Acquisition 

The competitive job market means employers are going to be eyeing their benefits plan as the “carrot on the stick” to attract and retain top talent in their industry. That means greater emphasis (and, dare we say it, budget?) on benefits. 

Proactive employers will be looking at options to support employees’ mental health and expanding existing benefits offerings to incorporate the kind of coverage most desired by Canadians. It’s important to note that benefits are not the only part of an employee attraction and retention strategy. Other popular employee perks include  flexible work options and work from home, childcare options, RRSP contribution matching, professional development opportunities, paid volunteer and personal time off hours, and more. 

Advisors have acknowledged that benefits are only a part of the attraction/retention piece for employees, it’s not the answer to all of the problems employers face with finding/keeping employees (other items are at play like salary/wages, flexible work options, type of work, etc.). 

Increased Focus on Financial Wellness and Flexibility 

Working Canadians are grappling with significant increases to inflation, affecting staples and necessary goods, like food and gas, and that doesn’t even begin to cover the rise in housing costs. There’s no way around it — many working Canadians will have their finances top of mind in 2022. 

A renewed focus on financial wellness and flexibility as an essential aspect of holistic health is something we’d like to see next year. We expect to see greater demand for financial wellness options, like RRSP contribution matching, or even just a hunger for educational information.

Basic financial literary webinars and sessions will be welcomed and encouraged as something everyone can benefit from. Working Canadians from the top of the organization to the bottom will be affected by this — everyone’s got to eat, right? — so financial education and greater offerings will see increased interest. 

Remote Work Will Continue to Bring Changes to Workplaces 

Though not exclusive to group insurance trends in 2022, remote work will be on many employers’ and employees’ minds. Although workers and leadership are still at odds about whether remote work will become a permanent fixture, the fact remains that it will still be a significant topic of discussion in 2022. 

Not only that, but employers choosing to retain remote workers permanently, even in a hybrid or part-time capacity, will need to look at essential staffing and structural changes. Technology teams will need to ensure scaling is possible, and data security will be a consideration, too. Likewise, Human Resources professionals and those in charge of hiring and staffing will need to adapt processes and may begin looking to hire for remote work specifically. This would allow them a greater breadth of candidates no longer based on region (and might go a long way towards the hiring challenges mentioned earlier). 

We’ll Need to Adapt to New Technologies, Faster 

The world is changing and employers and working Canadians will need to change with it, perhaps faster than ever before. 

As remote work takes off, we’ve already seen workplaces adapt — virtual meetings, updating manual processes, shifting to cloud-based services, the automation of many aspects of work. In 2022, this process may just continue and could really ramp up. 

Not sure how accurate we’ll be? Why not check out our 2021 prediction accuracy and see for yourself?

Looking Back on Group Insurance Trends for 2021
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