Report reading on tablet

How COVID-19 changed the SME employee benefits market

In exclusive research conducted on more than 1,000 small- and medium-sized business owners and decision-makers, Unum has taken a snapshot of SMEs’ attitudes towards employee benefits both before and during the COVID-19 pandemic.

We conducted the first wave of research in 2019, making the second wave, carried out in May 2021, valuable for charting the change in SMEs’ opinions on employee benefits and a range of other issues, such as sickness absence, as a result of the upheaval caused by the pandemic.

Highlights from the data include:

  • An increasingly challenging business environment
    Unsurprisingly, the pandemic made trading tough. 41% of SMEs lost a large client or experienced adverse market conditions in 2021, up from 29% in 2019.
  • COVID-19 infection rates
    45% of SMEs said at least one of their staff contracted COVID-19, whilst 35% reported a staff member with long COVID (where COVID symptoms persist for at least 12 weeks).
  • Pandemic-hit companies note ‘critical’ business impact
    33% of SMEs reporting a COVID-19 diagnosis said long-term sickness absence had caused a ‘critical’ impact on company finances and business success, rising to 38% of SMEs reporting an employee diagnosed with long COVID.
  • COVID-19 and its impact on employees
    56% of SMEs feel that the pandemic has led to new work-related mental health risks among employees, while 43% said it had led to new work-related physical health risks.
  • Changing mindsets
    64% of SMEs feel they have a moral obligation to help their staff back to work after sickness absence, up from 50% in 2019, while 48% of SME owners say the pandemic will change how we handle workplace health forever.
  • Proactive companies experience positive results
    40% of SMEs who only did the basics when it came to employee wellbeing saw an employee leave the business due to ill health in 2021; this fell to 17% of SMEs who stated they go “well beyond” the legal requirements.1

Changing times

With almost half of SME owners agreeing that COVID-19 will change the way we handle workplace health forever and a 14 percentage point increase in the proportion of SMEs saying they felt a moral obligation to help staff back to work after a sickness absence between 2019 and 2021,2 a sea change may be on the horizon. This will not just be in terms of how SMEs view employee benefits but also in how the insurance industry and brokers can best approach this market.

When this is coupled by the fact that SMEs who already offer a robust wellbeing strategy are around 2.3 times less likely to have had a member of staff exit the business due to sickness in the 12 months to May 2021, the value of employee benefits for SMEs is arguably clearer than it’s ever been.3

This is especially true when it comes to supporting benefits that sit alongside the underlying financial protection. This — whilst important — is only the tip of the iceberg in terms of what a modern-day employee benefits provider offers. Tools that can help employers manage sickness absences — an area in which fewer than 2 in 5 SMEs surveyed agreed they had expert-led support available4 — can be invaluable.

However, the research also found that perceptions about these services can hamper uptake. For example, 44% of SME owners said they’d invest more in employee health and wellbeing if they were more confident in what to do, while 46% felt that absence management support would be too expensive for their organisation.5

Helping SMEs and their employees get the benefits package they deserve

Insurers and brokers already do a great deal — and generally do it well — to serve the SME market. However, the research highlights just how important it is to recognise this sector of the market as distinct.

For example, with a sizeable minority of SMEs feeling like these services are too complicated for them to know what to do or too expensive, it’s vital to be able to assure them that absence management and similar employee health and wellbeing services can be simple and tailored to their needs and budgets.

Tackling absenteeism

This is perhaps most important when it comes to absenteeism, something that can have a greater business impact on SMEs than their larger rivals. This is because, being smaller, some SMEs find it harder to redistribute the workload and knowledge of an absent employee.6

Benefits that reduce the risk of absence and offer rehabilitation should it occur are therefore particularly powerful for SMEs. It’s here that it’s important to help SMEs look beyond the price of cover in pounds and pence and instead at its value. While ultimately price is understandably a big driving factor for many SMEs, which often have tighter budgets than larger firms, their needs mean that accompanying benefits beyond ‘just’ insurance arguably have more value.

Simon Hodgson, Unum’s Head of Public Policy, notes:

“In addition to the wider economic downturn caused by the pandemic, many of the SMEs surveyed were directly impacted by sickness absence, with 33% of surveyed businesses who had an employee diagnosed with COVID-19 reporting a critical or significant hit to their finances.

“Despite these challenges, there are reasons to be optimistic. There’s a growing appetite from SMEs to look after employees’ health and wellbeing. It’s here a Group Income Protection policy such as Unum’s that includes a full vocational rehabilitation service with a 95% success rate7 at keeping people in their jobs, getting them back to work or resolving their case could be incredibly valuable for SMEs beyond providing vital insurance for their staff.

“Our exclusive research also highlights just what SMEs can achieve with a high-quality health and wellbeing offering. We found that SMEs with a proactive approach to managing sickness absence and went “well beyond legal requirements” were around 2.3 times less likely to have lost an employee for health reasons in the previous year compared to firms simply complying with the minimum statutory requirements.

“We want to see more SMEs and their employees benefit and call on policymakers to look at how businesses new to health and wellbeing support can best be helped to introduce support for their employees. Serving this huge and diverse market well is a must to provide employers and their employees with all the support they need in a post-pandemic world.”

See more

More than 180 brokers accepted invites to Unum’s exclusive broker-only presentation on September 29 in a 30-minute webinar.

This included an introduction from John Bettinson, Strategic Insight Manager at Unum, on the background to the data, plus comments from Simon Hodgson, Head of Public Policy at Unum, on the general impact of ill health on the UK economy and how the government, insurance providers and brokers can collaborate to mitigate it.

If you missed the chance to catch it live, it’s now available to watch anytime anywhere.

Alternatively, for an even more in-depth look at the figures, we produced an entire report on the findings. Download it here.

1 -5 Cicero/amo consumer research: Survey conducted with 1,055 decision makers on the impact of COVID-19 in businesses employing up to
6 Department for Work and Pensions, Sickness absence and health in the workplace: Understanding employer behaviour and practice, July 2021, p.55
7 Unum internal data, 2020

We're here to help

Have a question or can’t find what you’re looking for? Get in touch with us.

Contact us