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Jamie Lawrence

Wagestream

Insights Director

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News: HR directors could be left with uninsured employees due to data errors

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Data errors may be unintentionally causing UK employees to become uninsured, according to new research from Punter Southall Health & Protection (PSHPC).

The company, which is just about to launch a new software package, conducted a pre-launch trial of 13 employers, which revealed 74 percent of the sample have identifiable data issues that could leave staff uninsured were they to make a claim.

On average, 78 out of every 500 employees surveyed (15.6 percent) could be affected.

The research goes on to suggest that each company with over 500 staff in the UK is estimated to carry around £9.36m of uninsured liability caused by data inaccuracies.

Insurers may refuse to pay out on claims where data errors have caused the employer to misrepresent risk.

Some of the reasons highlighted in the study as potentially affecting cover included:

  • Salary bands: pay rises, maternity pay, sick pay and other changes to remuneration
  • Place of work: relocation to areas with a higher risk profile can invalidate insurance
  • Long-term absence: full disclosure is necessary for cover to remain valid
  • Late Entrance: cover can be subject to employees joining at a specific time
  • Auto-enrolment: auto-enrolment may make some employees eligible for group cover but insurers must be made aware of any changes
  • High earners: employees earning above a certain threshold may require medical underwriting
  • Workforce size: insurers will often review policies if company headcount dramatically increases or decreases

John Dean, PSHPC Sales & Marketing Director, says: "Insurers can decline to pay a claim when data provided to insurers is inaccurate. However, it is often only when a claim is made that data errors are exposed. The key problem is that insurers only currently receive employer census data once a year, and often HRDs don’t know the data they need to regularly provide to ensure correct cover is in place. HRDs are sleepwalking into major problems should claims be made."

“The level of un-insured employees revealed by Gladis should be a wake-up call to businesses. The risk of self-funding life assurance is just too much for most companies – especially in today’s economic environment. Because Gladis asks for data to be sent monthly, the chances of wrong data being passed to insurers twelve times a year is substantially less. More accurate data also means employers can also save significantly on their premiums."

One Response

  1. Insurance only indemnifies the principle & their liability remai

    Surely the whole idea of having insurance is to indemnify the principle (insured) for any potential liability; it does not exonerate the insured and nor does it dispense with/extinguish their liability, which must remain in existence irrespective of insurance

    Therefore, with this in mind, surely the only party ‘at risk’ is the employer because the liability still rests with them even if no insurance cover exists?

    Yes it may be harder for the employee to claim, however, their claim remains against the employer even if there is no insurance cover in place to underwrite the employer

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Jamie Lawrence

Insights Director

Read more from Jamie Lawrence
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