Employment Insurance: Why The Hate?

There are many reasons why people may think employment insurance is bad. Firstly, insurance products are often complicated, filled with technical jargon that is difficult for the average person to understand without the help of an agent or broker. This complexity can make people feel like insurance companies are being deliberately obtuse or trying to confuse their customers. Secondly, insurance companies are often seen as untrustworthy, with a reputation for putting profits ahead of people and denying claims whenever possible. This perception is often based on past negative experiences or stories shared by others. Thirdly, insurance is expensive, and many people struggle to understand how premiums are calculated, feeling that insurance companies are taking advantage of them. Fourthly, insurance products are intangible, and people often prefer to spend their money on something more concrete or immediate. Additionally, insurance products may not provide a return on investment, especially if the policyholder never needs to make a claim. Furthermore, insurance companies have been known to raise premiums when a policyholder makes a claim, which can feel like a punishment for utilising the service you've paid for. Finally, employer-sponsored insurance can have negative effects on career progression by tying workers to a particular company, and it may not be in the best interests of either the employer or the employee.

Complicated and technical language

Employment insurance documents are often filled with technical jargon and complicated language that can be challenging for the average person to understand. This complex language is typically written by lawyers and insurance professionals, making it difficult for laypeople to comprehend without the assistance of an agent or broker. Hundreds of different technical terms and jargon are used in insurance product descriptions and documents, making it tedious and confusing for the reader. Even insurance agents and brokers may struggle to understand all the terms and conditions, as their primary goal is to make sales rather than explain the intricacies of the policies.

The use of complicated and technical language in employment insurance can be a significant drawback for potential customers. It creates a barrier to understanding the coverage they are purchasing and the specific terms and conditions of the policy. This lack of transparency can lead to confusion, mistrust, and dissatisfaction with the insurance product. It is essential for insurance companies to strive for clarity and simplicity in their communications to ensure that customers can make informed decisions about their coverage.

To address this issue, insurance companies should consider simplifying their language and using more straightforward terms in their documents and product descriptions. They should also provide clear explanations and examples to help customers understand the coverage and its benefits. Additionally, insurance agents and brokers should be well-equipped to explain the policies in a way that is easy for their clients to comprehend. This can build trust and ensure that customers feel confident in their insurance choices.

Furthermore, insurance companies should recognize that complicated and technical language can create a negative perception of their brand. By simplifying their communications, they can improve customer satisfaction, enhance their reputation, and potentially increase sales. It is in the best interest of insurance providers to strive for clarity and transparency in their products and services.

Lack of trust

Many people do not trust insurance companies and their employees, believing that they are out to get them. While some are just paranoid, many have had negative experiences with insurance companies that justify their lack of trust. This could be due to a lack of service from an insurance agent or broker, or unfair treatment of a claim. These bad experiences have contributed to the negative public perception of insurance companies.

The complex and technical nature of insurance products also doesn't help. The jargon-filled documents and product descriptions are often difficult for the average person to understand, and even some agents and brokers struggle to comprehend the terms themselves. This lack of transparency and understanding can further erode trust in insurance companies.

Additionally, people may feel that insurance companies are too expensive and are always looking to maximize profits at the expense of their customers. The calculation of premiums is not always clear, and insurance companies are known to reject or delay claims, which can be incredibly frustrating for customers who have been paying into the system.

The intangible nature of insurance products and the lack of immediate returns on investment can also make people skeptical about the value they are getting. People may question why they are making monthly payments for something they might never use or need.

All these factors contribute to a general lack of trust in insurance companies and their products, leading some people to believe they would be better off without insurance.

High costs

Employment insurance is often criticised for being unreasonably expensive. Many people are of the opinion that insurance is too costly because they don't fully understand how premiums are calculated. Even insurance agents and brokers are sometimes unable to explain how insurance companies arrive at their rates.

In the US, the average cost of employer-sponsored health benefits is expected to reach $15,000 per employee in 2024, with companies covering 70% of the bill. The cost of insurance can also be high for employers, who have to grapple with what to offer their employees and how to deal with administrative issues that arise. For example, Stanford University spends close to $200 million a year on health insurance premiums and has to hire people to work in human resources and administer benefits plans.

The high cost of insurance can also be attributed to the fact that insurance companies are businesses that want to make a profit. As a result, they are reluctant to release funds to insurance buyers and may reject or delay claims. This can be particularly frustrating for people who have been paying premiums for years.

In addition, insurance is often provided as an employment benefit, which can tie workers to a particular company. This can retard career progression and prevent employees from moving to better jobs that may be a more desirable match for their skills.

Rejected claims

Insufficient Work Hours

To qualify for employment insurance benefits, individuals must have worked a certain number of hours during their qualifying period, typically the year before their application. Not meeting this requirement can lead to a rejected claim.

Termination for Just Cause or Voluntary Resignation

If an individual is fired for a valid legal reason or quits their job without a just cause, they may not be eligible for employment insurance benefits. This can result in a rejected claim.

Unavailability for Work

Individuals who are not actively looking for a job or are otherwise unavailable for work may not be eligible for employment insurance benefits. This unavailability can lead to a rejection of their claim.

False Statements or Misconduct

Providing false statements or engaging in misconduct during the application process can result in a rejected claim. In such cases, individuals may also be required to repay benefits and pay additional penalties.

Incomplete or Missing Documentation

Employment insurance claims may be rejected due to incomplete or missing documentation. It is essential for applicants to provide all the necessary information and supporting documents to avoid claim rejection.

New Information Affecting Eligibility

Sometimes, new information may come to light that affects an individual's eligibility for benefits. This could include changes in employment status, income, or other factors. In such cases, a claim that was initially approved may be re-evaluated and rejected.

The rejection of employment insurance claims can have significant financial implications for individuals and their families. It is important for applicants to understand the eligibility criteria and provide accurate and complete information to increase their chances of a successful claim.

Intangibility of products

One of the reasons people think employment insurance is bad is the intangibility of insurance products. This means that insurance is a product you cannot see or feel, and this is off-putting to many people. Unlike a physical product, you cannot touch or experience insurance, and this makes it harder to understand and trust.

The intangibility of insurance products is closely linked to their complexity. Insurance documents are filled with technical terms and jargon that are difficult for the average person to understand. This complexity makes it hard for people to know what they are buying and how it will benefit them. Many insurance agents and brokers don't even fully understand the terms themselves, as their primary goal is to make a sale rather than educate their customers.

The intangibility and complexity of insurance products also contribute to a lack of trust in insurance companies. People feel that insurance companies are out to get them and that the policies they are sold may not provide the expected benefits when needed. This perception is reinforced by negative experiences, such as unfair treatment of claims and poor service from agents.

The lack of trust in insurance companies is further exacerbated by the high cost of insurance. Many people find insurance premiums unreasonably expensive, and the calculation of these premiums is not transparent to most. This lack of transparency makes people suspicious of insurance companies' motives and reinforces the perception that insurance is a bad investment.

The high cost of insurance, combined with its intangibility and complexity, leads to a sense of buying something intangible and unnecessary. People often view insurance as a waste of money, especially if they are young and healthy, as they may never need to use it. This perception is strengthened by the fact that insurance products do not provide an immediate return on investment. Instead, people make monthly payments for a product they may never use, which feels like a poor investment compared to other tangible purchases.

Overall, the intangibility of insurance products, coupled with their complexity, high cost, and lack of immediate ROI, contributes to a negative perception of employment insurance. People find it challenging to understand and trust, and the fear of being taken advantage of by insurance companies is prevalent.

Frequently asked questions