As per the survey conducted by Deloitte India 2022 related to the Workforce and Increment Trends. India has faced an increase in the average workforce attrition rate from 15.8 percent in 2020 to 19.8 percent in 2021. It was fueled by various factors, such as lower salaries, reduced fringe benefits, increased workload, insufficient workforce insurance, and reduced interpersonal & social interactions. Therefore, in today’s workforce environment, it’s more crucial for companies to provide their employees with comprehensive insurance coverage, job security, health security and flexibility. By doing so, companies can reduce attrition and will see a drastic increase in employee retention.
Key Takeaways
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The Attrition Crisis: India’s attrition rate hit 19.8% in 2021. Companies that fail to provide “health security” and “financial safety nets” are seeing their talent pool shrink as employees move toward organizations with better benefits.
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Valued Employees Stay: When a company secures an employee’s family through health and life cover, it fosters a sense of being “valued.” This emotional security is a stronger driver of long-term loyalty than salary alone.
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Workplace Liability Protection: Comprehensive insurance, particularly Workmen’s Compensation, ensures that the company is not crippled by massive payouts or legal battles if an accident occurs on the job.
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Health Equals Productivity: There is a direct link between “Wellness” and “Work.” Employees with access to healthcare are more productive and less likely to take extended leaves for untreated chronic conditions.
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The “Tax Break” Incentive: Under the IRDA Act of 1999, the premiums paid by a company for employee insurance are considered legitimate business expenses, allowing firms to reduce their taxable income while improving their culture.
What is Employee Attrition?
When the employee leaves the company through voluntary resignation due to personal or professional reasons and the vacant position cannot be replaced immediately. This refers to employee attrition. There can be various reasons including low salary, no salary hike, lack of employee benefits, unfavourable office conditions, etc.
How Comprehensive Insurance Coverage Can Benefit in Reducing Attrition?
● By Providing Health Insurance Coverage to Enhance Productivity
Health insurance coverage for employees is essential to offer them access to proper treatment. This will increase employee wellness and is helpful for workers who are often exposed to hazardous working environments. This will, in turn, enhance health security and productivity among the employees.
● Reduces Company Liability
Workmen’s compensation insurance is important for companies to have in order to
avoid higher costs and lawsuits. This type of insurance will cover any liability that results
from an employee’s disability, injury, or death while on the job. The amount rewarded
can help workers and support their families due to loss of income.
● Encourages Employee Loyalty and Job Satisfaction
If companies financially secure their families with comprehensive insurance coverage including health and life insurance, the employee will feel valued. This encourages loyalty towards work and gives them job satisfaction.
● Helps with Tax Benefits
The premium that companies pay for employee benefits coverage becomes a business expense. This is reflected in the P/L account and is eligible for tax breaks, known as ’employer entitlement,’ according to the Insurance Regulatory and Development Authority Act, 1999.
Summary Table: Impact of Insurance on Employee Retention
| Benefit Type | Employee Value | Business Advantage |
| Health Insurance | Access to quality medical care and wellness. | Productivity: Reduces absenteeism and enhances energy. |
| Workmen’s Comp | Financial shield against workplace injuries/disability. | Liability: Protects the company from lawsuits and high legal costs. |
| Life Insurance | Security for the employee’s family in case of death. | Loyalty: Increases job satisfaction and emotional connection. |
| Tax Benefits | Enhanced “fringe benefit” package. | Financials: Premiums are tax-deductible as business expenses. |
| Comprehensive Tech | Easy access to policy details and claims. | Efficiency: Simplifies administration and cost containment. |
At SecureNow, we provide companies with a comprehensive tech solution for their insurance needs, from policy distribution to claims assistance. Our platform allows companies to offer customized packages and track detailed reports on policy usage and cost containment. Contact us to get better value!
Frequently Asked Questions (FAQs)
1. Is “Attrition” the same as “Turnover”?
A) They are similar but distinct. Turnover is the overall rate at which employees leave and are replaced. Attrition specifically refers to the reduction in staff through voluntary resignations or retirement where the position is often not immediately filled, potentially leading to increased workload for remaining staff.
2. Can a small startup afford comprehensive employee insurance?
A) Yes. Modern insurance solutions allow for “Group Policies” which are significantly cheaper than individual plans. Startups can customize packages to cover basic health and accidental risks, scaling the benefits as the company grows.
3. Does the “Tax Benefit” apply to all types of employee insurance?
A) Generally, premiums paid for Group Health, Group Life, and Workmen’s Compensation are considered business expenses. These are eligible for tax deductions under the “Employer Entitlement” provisions of Indian tax laws.
4. How does insurance help if an employee works from home?
A) Even in a remote setup, companies have a “Duty of Care.” Health insurance ensures remote workers manage their wellness, while specific liability policies can sometimes cover work-related ergonomic injuries or digital security risks.
5. What is “Cost Containment” in the context of employee insurance?
A) Cost containment refers to strategies used by companies to keep insurance premiums manageable. This includes using tech platforms to track policy usage, choosing the right deductibles, and implementing wellness programs to reduce the frequency of medical claims.
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About The Author
Rahul Kumar
MBA Finance
With a wealth of experience in the insurance industry, Rahul is a seasoned writer specializing in articles related to workmen compensation policies (WC policies) for SecureNow. With 12 years of experience in the field, he has acquired in-depth knowledge and expertise in workmen compensation insurance, understanding its complexities and nuances. Their insightful articles provide valuable insights into the importance of WC policies for businesses and employees alike, offering practical advice and guidance on navigating the intricacies of insurance coverage. Trust him to deliver informative and engaging content, backed by years of experience and a passion for educating readers about insurance-related topics.
