Zurich-Oxford report: How to prepare for the unexpected in a post-COVID world

• Newest research by Zurich and the University of Oxford looks at how COVID-19’s impact demands solutions that help people prepare for financial crises
• Mandatory coverages that help build and protect income are increasingly discussed
• Auto-enrollment has proven its worth and could be used more often in pension programs
• Recommendations for governments and policymakers, employers and insurers can help shape the post-pandemic workplace

New ways of protecting people from the kind of economic distress caused by the COVID-19 pandemic may be found in mandatory schemes that would provide support when hardship hits, research from Zurich Insurance Group and the Smith School of Enterprise and the Environment at the University of Oxford reveals.

Among the recommendations in the report, “Shaping A Brighter Future of Work”, are calls to consider mandatory provision of some types of income protection insurance, such as coverage for disabilities and unemployment. Auto-enrollment of employees in plans such as those that offer basic income protection and participation in pension schemes is also recommended.

“While some countries were hit harder by COVID-19 than others, people in every corner of the globe found themselves facing financial hardship and drained their savings, and, in some cases, retirement funds, as a way to stay afloat,” said Alison Martin, Zurich’s CEO EMEA and Bank Distribution. “Our findings highlight the demand for solutions that will make it easier for people to prepare for and make it through these kinds of crises.”

The report is the latest in research that began in 2015 when Zurich and the Smith School partnered in an initiative that focused on income protection gaps and agile workforce protection, i.e. flexible insurance and associated worker protection which is provided by multiple stakeholders and tailored to individual career trajectories, addressing various transition points in working lives. The earlier work, which includes a report published in October 2020, established the need for decisionmakers to update social protection frameworks. The impact of COVID-19 reinforced those findings.

Earlier phases of the research included surveys of consumers, employers and insights from Zurich customers. “Shaping A Brighter Future of Work” builds on those findings with interviews of Zurich senior leaders in 17 countries¹ that were previously surveyed, providing insights into how the pandemic is shaping the agenda for a new social contract at the national level.

“Employers are grappling with concerns around training, reskilling and caring for their people and this research looks at how leaders are prioritizing and managing these issues, many of which were exacerbated by the pandemic,” said David Henderson, Zurich’s Group Chief Human Resources Officer. “To address these concerns, governments, employers and insurers can look to the report’s recommendations, which call for such strategies as offering incentives for participation in skilling programs, helping employees prepare for retirement through financial education programs and auto-enrollment in pension plans, and conducting assessments of wellbeing activities to ensure they adequately consider employees’ physical and mental health.”

Calls for mandatory and compulsory protections are being raised in some countries, the report notes. In Spain, for example, discussions are being held regarding a UK-style model of auto-enrollment into pension plans and the introduction of compulsory savings programs. In the UK, there is discussion around making employer-funded sick pay compulsory.

Auto-enrollment could make a difference in helping people prepare for retirement, if the UK model is successful in other parts of the world. In 2019, 77% of UK employees participated in a workplace pension scheme, up from 47% in 2012 when auto-enrollment began, according to the UK’s Office for National Statistics. Young employees – aged 22 to 29 – saw the largest growth in workplace pension membership over the period, rising to 80% from 31%.

Income protection insurance and term life coverage are expected to see heightened interest from people who were hurt by the financial impact of the pandemic or know someone who was, according to the research. Such interest, however, has been slow to develop and may not translate into heavy demand. This follows Zurich-Oxford research in 2019 that revealed low levels of income protection among survey respondents.

There is a need for education around the importance of preparing for any type of costly setback, the report notes, and it lays out some of the ways insurers and others can provide that help.

The report includes a number of recommendations that governments and policymakers, insurers and employers can adopt to help workers prosper in their careers and ensure they are well-prepared for life after work. The topics cover skilling, financial education, social protection, healthcare, and retirement and savings.

“The pandemic has made our earlier research all the more relevant and our recommendations in the current report are particularly important in light of the pandemic,” concludes Alison Martin. “The world has been shaken by COVID-19, but insurers, governments and employers are more aware of what it will take to be better prepared for the next crisis.”

¹ This publication shows the findings from interviews with Zurich senior leaders in the 17 including Australia, Brazil, Finland, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, Mexico, Portugal, Romania, Spain, Switzerland, UAE, UK and the U.S.

Further information
More information on the workforce protection program can be found here.

Find other content pieces on Zurich.com:

• Skills development can bridge a growing divide among workers
• Employees expect companies to play a bigger role in wellbeing
• Employers navigate new challenges as post-pandemic workplace takes shape