Looking Back at our 2022 Group Insurance Trends and Predictions
By: Benefits by Design | Tuesday January 10, 2023Updated : Friday January 13, 2023
Last year our crystal ball must have been quite clear, because our trends and predictions for 2022 were close to on-target! Let’s take a closer look at each of them and we’ll provide our reasoning for each score we’ve given ourselves.
10 Group Insurance Trends and Predictions for 2022 (bbd.ca)
1. Continued Impacts of COVID-19
It was difficult to get this one wrong, since the impacts of COVID-19 are everywhere. We asked some pretty big questions in our predictions though, and we’ll attempt to answer some of them:
- Q: Will employers require a COVID-19 vaccine in order to return to work? And can employers terminate employees who choose not to get vaccinated?
- A: Unless mandated by the government for a particular sector of public employees, or negotiated as part of a Union’s Collective Bargaining Agreement, employers are not legally allowed to require employees to be vaccinated in order to work.
- Q: Will work from home be here to stay?
- A: The short answer is yes. See prediction #9 for the long answer!
- Q: Are employers effectively using their benefits plan as a recruiting tool?
- A: According to research done in 2020 by GRiD, only 22% of employers were including their employee benefits plan in their job ads. With the shift to be more competitive and inclusive, employers have been touting their benefits plans more often and earlier on in the recruiting process.
Overall, the pandemic influenced all our 2022 trends and predictions, so don’t be surprised when we bring it up again.
2. Continued Mental Health Crisis & More Emphasis on Solutions
As much as it pains us to say, this prediction was on point.
Canadians’ mental health has remained fairly steady throughout 2022, and was similar to the previous year. According to the November 2022 LifeWorks Mental Health Index: “33% of Canadians have a high mental health risk, 43% have a moderate mental health risk, and 24% have a low mental health risk.” This means that unfortunately, the mental health crisis did not improve.
In terms of solutions, employees agree their employers have stepped up. The 2022 Benefits Canada Healthcare Survey reported that 75% of employees believe their workplace supports their mental health. Globally, insurers reported a 40% rise in the use of mental health services. And 46% of employers plan to increase their spending on mental health support going forward.
More and more employers are looking at flexible work hours and schedules – such as the 4-day workweek and working from home. Plus, they are providing more days and options for Personal Time Off (PTO) and taking unpaid leave.
Claims paid out to support mental health up 75% since 2019: CLHIA | Benefits Canada.com
3. Increasing Long Term Disability (LTD) Insurance Incidence Rates
Preliminary data on Long Term Disability cases shows that incidence rates did increase in 2022. What’s more, mental health disability claims represented more than a third of overall claims.
Delays in diagnosis contributed to this as well. “Insurers say people are experiencing the effects of disrupted care alongside ongoing COVID claims. 55% of insurers report an increase in later-stage diagnosis of illness due to deferred care” – MMB Health Trends 2023
Mental health can decline as a result of delays in seeing a surgeon or rehab specialists, which can sometimes lead to secondary diagnoses.
As we predicted, there was a small silver lining. With the rise in interest rates, we have seen this positively impact the reserves for new claims. This helped to limit the impact that the increased incidence rate has had on overall LTD rates.
4. Impacts of Inflation and Cost of Service Increases Will be Felt
The year 2021 saw inflation rates higher than we’d seen since 2003. And then 2022 came along and blew that 4.7% to smithereens. In June we reached a whopping 8.1% inflation rate. All of this means that the cost of everything has gone up. From necessities to entertainment, nothing has been spared.
We surmised that dental and paramedical services costs would increase due to:
- PPE and clean-up – some dentists and practitioners continue to charge for this
- Supply chain costs – because the materials cost more, the charges must go up
Both dental and paramedical services are being accessed by plan members at the same rate as before the pandemic. That, combined with the fact that the cost of claims have increased, explains the rise in the amount reimbursed for claims. In fact, for health and dental alone, Canadian insurers paid over $30 billion in claims.
The overall cost of claims from plan members is higher. Therefore, the cost for plan sponsors and insurers has gone up. Which of course means premiums will have to increase in order to cover the cost of the increase in claims experience.
5. The Rise of High-Cost Drugs Will Continue
Given the continued trends in high-cost drugs over the last five years, we are mostly confident we got this one right.
The overall costs for employer-sponsored benefits plans in Canada are expected to increase by 6.3% in 2023. Globally, the biggest driver for this increase “continues to be overuse of care (74%) due to medical professionals recommending too many services or overprescribing.” – 2023 Global Medical Trends Survey
Digging even deeper, we see that the increase in the price of high-cost drugs is outpacing inflation in the US. And Canada is not immune to these increases, as many of our high-cost drugs are manufactured outside of the country.
What’s more, according to the Canadian Life and Health Insurance Facts, 2022 Edition, “specialty drugs now represent 29% of total drug spend.”
And with 2021 seeing a 6.2% growth in drug costs from 2020, we can infer that this trend continued in 2022. However, there are sure to be further reports released in 2023 with more data, so we’re giving ourselves an 8 on this one.
6. Competitive Job Market Will Lead to Continued Hiring and Staffing Challenges for Employers
The unemployment rate in Canada in 2022 declined overall from 2021. According to StatsCan, the unemployment rate was highest in January – at 6.8%. By June, it was down to 4.7% and it now rests at 4.6%. To put this in perspective, the average unemployment rate for 2019 was 5.7%.
With a lower unemployment rate comes a more competitive job market, and Canadian small businesses are not immune to this. In fact, a recent survey by the Canadian Federation of Independent Business (CFIB) reported that 49% are affected by skilled labour shortages.
Another report by StatsCan shows how the ratio between the number of unemployed people versus the number of job vacancies continues to decline. In 2016, the ratio was 4.5:1, meaning there were more than 4 unemployed persons for every job vacancy. Today, that ratio sits at 1.4:1. Another hurdle is the discrepancy between the wage a prospective employee expects to be paid versus the wages being offered by employers.
We’re giving ourselves full marks for this one since we totally nailed it!
7. Employers Will Prioritize Benefits and Perks for Employee Retention and Acquisition
The top reason in 2022 for Canadian employers to offer an employee benefits plan was attraction and retention. And according to a LinkedIn Report, companies rated highly on compensation and benefits saw 56% lower attrition than companies who were not rated highly in these categories.
Plus, with inflation as high as it is, getting the most out of every dollar is a priority. Did you know that every dollar spent on employee salaries costs the employer approximately $1.29 after the government is paid? And employees take home an average of only $0.60 after they pay taxes.
Pay Raises Cost More than You Know Info Sheet
Other perks and incentives include flexible working options, vacation and PTO, as well as salary and wage. In 2022, 86% of businesses had policies like paid time off, parental leave, and flexibility, which was up from 21% from the previous year.
We think it’s great to see work-life-balance and employee wellness being prioritized by employers, and given the increase in offerings, as well as the lower attrition, we’re going with 90% accuracy here.
8. Increased Focus on Financial Wellness and Flexibility
As we predicted, high inflation has meant staples (food, clothing) and housing costs (rent, heat, power) have all risen. Not to mention the extremely high gas prices we experienced last year. This has kept finances top of mind for Canadians.
Employers have heard the call by approaching financial health as part of the holistic health of an employee. And the demand for financial wellness options and resources has also increased. Between financial webinars, Group Retirement Solutions (GRS), retirement savings matching, and Employee Assistance Programs, employees have access to more financial wellness options than ever before!
But is it enough? According to one study, only “45% of employees agreed that their employer was committed to supporting their financial wellness.” And when it came to small businesses, that number decreased to 32%. We’ve seen a lot of improvement, but employers have an opportunity here to step-up even more, which will help improve employee attrition, engagement and productivity.
Because of the fact that employees are asking for more, we’re giving ourselves a lower grade on this one.
If you’re interested in helping your employees but don’t have a lot of budget space, the Credit Counselling Society does free workshops and webinars on a variety of financial topics.
9. Remote Work Will Continue to Bring Changes to Workplaces
Will remote work be a permanent thing? We think it’s safe to say it’s here to stay!
The 2022 Benefits Canada Healthcare Survey showed that in 2022, 64% of employees with group benefits in Canada worked from home at least some of the time. And 56% of plan sponsors agree they would prefer it if their employees worked from home at least 40-80% of the time.
Technology, data security and business needs were all factors in whether or not remote work would or could be embraced. What do IT professionals believe? Fifty-six percent agree that remote workers present a greater security risk than their onsite counterparts.
Hiring managers adapted to include the ability to hire remote and hybrid workers. We were curious to see if this would help with staffing challenges. We were unable to find conclusive evidence either way, but given the fact that the labour market is still very tight, we are inclined to believe it did not have much impact.
The majority of both employees and employers believe workers are more or equally as productive at home. Plus, 78% of CEO’s believe that “remote collaboration should be considered a long term strategy.”
We’re taking away a few marks on this one because we aren’t able to confirm if remote hiring helped with staffing challenges.
10. We’ll Need to Adapt to New Technologies, Faster
The pandemic brought an extreme and quick shift in the way we work. Any place that could went remote, and with that came technical hurdles to overcome.
- All workers had to be set-up at home without supervision
- Cloud-based services for team collaboration were introduced
- Manual and in-person processes had to be updated or changed
- Other processes had to become automated, both for ongoing work and for hiring, onboarding and training employees.
- All employees had to be trained in cybersecurity
Although adaptation has continued through 2022, it looks like the biggest and fastest change occurred prior to last year. So, while we agree that new technologies continued to make disruptions in business processes, the speed at which this occurred was much slower than we predicted.