An Australian subsidiary of an international construction and engineering company engaged Aon to review the structure and terms of a long-standing income protection (IP) scheme managed by a major consulting firm.
The client partnered with Aon to:
- renegotiate and improve their IP policy terms to reduce the requirement for underwriting
- reduce the costs of the benefit plan which had increased by more than 100% in the previous three years.
Initial discussions with the client revealed they were confident in selling ‘reasonable’ alterations to benefit design internally. Aon proposed:
- a reduction in benefit period from ‘to age 65’ to ‘5 years’
- a lump sum benefit of 2 x salary for death by any cause
- introducing TPD to compensate for reduction in income benefits
- cover from an offshore insurer who was able to match policy definitions and provide IFSA takeover terms to ensure a seamless transfer.
After implementing Aon’s solutions:
- medical underwriting burden was significantly reduced with 75% less cases to deal with
- a staff survey revealed the change in benefits was well received, with the perception it was a smarter benefit design with no real loss of benefits
- an overall premium saving of $1millon was achieved, approximately 50% of previous premiums
- mandatory life cover was included in the cover at no additional cost.