Liga Asuransi – Fellow employees and HRD team, how are you? Welcome to our blog which always thoroughly discusses various topics regarding risk management and risk mitigation. This time, we will thoroughly examine its importance Health Insurance for companies and employees. Through this article, you will understand how health protection can increase productivity, reduce absenteeism, and strengthen team loyalty. If you find useful insights, don’t hesitate to share them with your peers and colleagues. Don’t forget, there are hundreds of other interesting articles available here that are ready to help you manage risk effectively and proactively. Happy reading and hopefully it’s useful!
Employee health costs in Indonesia continue to increase—according to BPJS Health data, total claims service health reached more than Rp 100 trillion by 2023, up about 12 % compared to the previous year. Flat‑the average company spends Rp 2–3 million per employee per year for basic health benefits, not including indirect costs such as sick leave and lost productivity. Number‑this figure shows a significant financial burden for the business world, especially amidst economic uncertainty and post-economic challenges‑pandemic.
However, there are still many managers and business owners who view company health insurance premiums alone‑eyes as “cost” routine—a burden that must be incurred without measurable direct benefits. This perception often ignores the potential long-term savings and strategic added value that can be gained through proactively managing employee health. As a result, health insurance programs are often seen as mere administrative formalities, not investment instruments capable of strengthening a company’s competitiveness and operational stability.
In this article, we will change that paradigm by outlining the five main reasons why company health insurance is truly an investment, not an expense. You will understand the basic differences between premium costs and benefit values, the positive impact on employee productivity and retention, comparison of claims costs versus long-term premiums, as well as examples of employee health program ROI calculations. With this insight, your company will be better prepared to make smart decisions in designing optimal health insurance schemes.
Definition of Corporate vs. Private Health Insurance Individual Insurance
Understanding Individual Insurance
Individual health insurance is designed to protect one person (the policyholder) or immediate family members with premiums paid independently. Coverage is generally limited to medical risks faced by the policy holder, such as inpatient, outpatient and routine health checks according to the policy provisions. Because premiums are set based on personal risk profile—age, health history, and lifestyle—individual premium costs tend to be higher per person than group plans.
Understanding Company Health Insurance
In contrast, corporate health insurance is a group policy purchased by an employer to cover a group of employees, and often their family members as an additional option. Companies pay collective premiums based on the number of employees and selected benefit coverage. In this way, every employee gets access to medical services without having to manage registration and premiums independently.
Key Differences
- Premium Scale
Individual: Premiums are calculated per person, with a high risk variable if the policyholder is elderly or has a history of illness.
Company: Premiums are distributed across the group, reducing the average‑average cost per employee.
- Tariff Negotiation
Companies have greater bargaining power to negotiate more competitive premium rates and customize benefits.
- Additional Services (Wellness Program)
Group policies often cover preventive health programs, such as periodic health checks, nutritional counseling, and fitness training, which are rarely available on individual insurance.
- Benefits of Group Scale
Premium Discount: With a large number of participants, insurance companies offer premium discounts of up to 10–20 % compared to individual premiums.
Package Flexibility: Companies can customize benefits—for example, adding dental or maternity benefits—according to employee demographic needs, while managing budgets efficiently.
By understanding the differences and advantages of group schemes, it is clear that corporate health insurance offers much greater added value than individual insurance, both in terms of costs and strategic benefits for the organization.
Positive Impact on Employee Productivity (Decreased Absenteeism)
- Definition of Absenteeism
Absenteeism is a condition where employees are absent from the workplace without adequate planning, whether due to illness, personal matters, or other factors. High levels of absenteeism not only disrupt smooth operations, but also affect teammates’ workload and company costs for substitutes or overtime.
- Relationship between Health and Work Attendance
Poor health—both physical and mental—is a major cause of absenteeism. Employees without easy access to medical services tend to delay treatment until conditions worsen, resulting in longer absences. On the other hand, employees who feel protected by health insurance will receive treatment more quickly, speed up their recovery and return to productivity.
- Rate Date‑Average Sick Days for Employees Without Insurance
Internal studies show employees without health insurance are flat‑average takes 8–10 sick days per year. Compare that to employees in group insurance plans, which is flat‑average is only 4–6 days of illness due to early detection and fast treatment.
- How Insurance Reduces Absenteeism
Fast Access to Care: Group policies usually provide direct or cashless billing within the hospital network, so employees don’t have to wait for reimbursement.
Preventive Program: Regular health checks, vaccinations, and healthy lifestyle workshops help detect risks early.
Telemedicine: 24/7 online consultation service makes it easy for employees to consult a doctor without having to take time off or go to a clinic.
- Examples of Numbers/Statistics
Company X (manufacturing, 500 employees) recorded a decrease in absenteeism of 30 % within one year after launching group health insurance complete with wellness program. Sick days per employee decreased from 9 days to 6 days, equivalent to an additional 1,500 effective working days and a potential increase in output of up to 12 %.
By reducing absenteeism rates, company health insurance directly increases employee productivity and reduces operational costs incurred due to absenteeism.
Impact on Employee Retention and Loyalty
- Retention Challenges in a Competitive Era
In a tight labor market, retaining top talent is a major challenge. The cost of recruiting and training new employees is estimated at 1–2 times annual salary, so high turnover has a significant impact on costs and team stability.
- Health Benefits as an Employer Value Proposition
Comprehensive health insurance is part of the Employer Value Proposition (EVP) that attracts prospective employees and adds a reason for employees to stay. Packages that cover inpatient, outpatient, and mental health services demonstrate the company’s commitment to employee welfare.
- Correlation Between Benefits and Loyalty
A global survey revealed that 78 % of employees rate health benefits as an important factor in their decision to remain with a company. In Indonesia, local data shows 65 % of respondents are more loyal to companies that provide family health insurance.
- Employee Satisfaction Survey: Health Insurance Ratings
The results of L&G Insurance Broker’s internal survey of corporate clients show, average‑The average employee satisfaction with group health insurance benefits reached 4.3 on a scale of 5. The aspects most appreciated were the ease of claims (cashless) and the coverage of telemedicine services.
- Testimonials/Quotes
“Since the company provides family health insurance, I feel calmer and can focus on work. This makes me confident about having a long-term career here.”
— Rina, Senior Marketing Specialist
“The integrated wellness and telemedicine program really helps our team maintain health without disrupting work schedules.”
— Budi, HR Manager, Company Y
With strong health benefits, the company not only minimizes turnover, but also builds a culture of sustainable loyalty and satisfaction. Company health insurance has proven to be a strategic instrument for retaining talent and strengthening employer branding.
Impact on Employee Retention and Loyalty
- Retention Challenges in a Competitive Era
In the midst of increasingly fierce competition for talent, companies are facing difficulty retaining top employees. According to Mercer research, turnover is flat‑The average in Indonesia reaches 18 % per year, with employee replacement costs estimated at 1–2 times the annual salary per person. Employee turnover not only incurs recruitment and training costs, but also disrupts project continuity and lowers team morale.
- Health Benefits as an Employer Value Proposition (EVP)
Comprehensive health insurance is now a key element in a company’s EVP. Insurance packages that cover inpatient, outpatient, dental and mental health services show the company’s commitment to employee welfare. By placing health benefits as a priority, companies can differentiate themselves in the job market, attract quality candidates, and demonstrate company values that care about employee well-being.
- Correlation Between Benefits and Loyalty
Various studies show a close relationship between health benefits and employee loyalty. Aon Hewitt data reveals that 75 The % of employees who are satisfied with their company wellness program tend to stay longer than three years, compared to just 40 % of those who do not get similar benefits. In Indonesia, an L&G Insurance Broker survey of 10 client companies indicated that 68 % of employees rate health insurance as the main reason they stay at the company.
- Employee Satisfaction Survey: Health Insurance Ratings
Internal satisfaction surveys show:
- Ease of Claims (Cashless): 4.5/5
- Preventive Benefit Coverage (Wellness Program): 4.2/5
- 24/7 Telemedicine Services: 4.0/5
- Plan Flexibility (family option): 4.3/5
- Flat‑The overall average score was 4.25, indicating a high level of satisfaction with the group insurance scheme.
- Testimonials/Quotes
“Since the introduction of group health insurance, our team’s turnover rate has decreased significantly. Employees feel valued and are more loyal.”
— Andi, HR Manager, PT Sukses Makmur
“I feel calm because my family is also protected. This makes me more focused and enthusiastic at work.”
— Maya, Finance Analyst
By prioritizing health insurance as part of the EVP, the company not only increases employee retention but also strengthens employer branding. Employees who feel their well-being is cared for will become the company’s best ambassadors, helping attract new talent and maintaining a competitive edge in the market.
Comparison of Claim Costs vs. Claim Costs Long Term Premium Costs
- Premium Cost Components
The cost structure of company health insurance premiums generally consists of:
- Company Contribution: The majority of the premium is covered by the company, usually 70–100 % of total premium.
- Employee Contribution: The remainder can be charged to the employee, especially for additional packages such as dental or maternity riders.
For example, for a premium package of Rp 3 million per employee per year, the company bears Rp 2,4 million (80 %), and employees pay Rp 600 thousand (20 %).
- Claim Cost Analysis
Flat claim costs‑average per employee per year varies depending on policy coverage and demographics. L&G Insurance Broker data shows that average‑Average inpatient and outpatient claims for employees aged 25–40 years is around Rp 2 million per year. This figure does not include indirect costs such as additional sick leave and reduced productivity.
- Long Term Projection Model
To understand the value of premiums as an investment, companies need to compare the total cost of premiums with the potential costs of claims without insurance in the long term. Here’s a simple simulation for 100 employees for 5 years:
Component No Insurance With Insurance (Premium)
- Flat‑Average Claims/Year/Employee Rp 2.000.000
- Total Claims 5 Years 100 × 2,000,000 × 5 = Rp 1.000.000.000 —
- Premium/Year/Employee Rp 3.000.000
- Total Premium 5 Years 100 × 3,000,000 × 5 = Rp 1.500.000.000
Without insurance, the company risks incurring up to Rp 1 billion in direct medical costs. With a premium of Rp 1,5 billion over 5 years, companies not only cover potential claims, but also gain the benefits of preventive programs, case management, and telemedicine that can reduce actual claims.
- Break‑Even Point
Break‑Even point occurs when the total premium paid is equal to the potential claim costs. Based on the simulation above:
Potential Claim Cost: Rp 1.000.000.000
Annual Premium: Rp 300.000.000
Break‑event is reached after approx‑about 3.33 years (1.000.000.000 ÷ 300,000,000). After this period, any additional premium actually becomes “profit” from a protection perspective, because potential claims are avoided or minimized.
Even though the total premium seems higher than the average claim‑On average, corporate health insurance offers financial protection against unexpected medical costs, as well as the added value of preventive programs and digital health services. With a long-term approach, premiums are not just a burden, but a strategic investment that mitigates the risk of health costs and improves employee welfare.
The Important Role of Insurance Brokers
Insurance broker plays a crucial role in ensuring companies get health insurance solutions that are appropriate, efficient and according to their needs. First, the broker acts as an independent advisor who understands the ins and outs‑the ins and outs of the insurance market, from product comparisons to underwriting policies. With this expertise, brokers help companies navigate a variety of policy options, selecting the most relevant benefits—such as inpatient, outpatient, dental, and telemedicine services—and negotiate competitive premiums that fit your budget.
Second, the broker facilitates the administration and claims process. L&G Insurance Brokers, for example, provides end services‑to‑end: starting from collecting employee data, applying for policies, to assisting with cashless claims at partner hospitals. This proactive approach ensures employees have quick access to healthcare services without complex administrative burdens.
Third, brokers play a role in designing integrated preventive health programs. L&G developed wellness modules—regular health checks, healthy lifestyle workshops, and a 24/7 telemedicine platform—to reduce the number of claims and absenteeism. This program not only lowers long-term medical costs, but also increases employee productivity and satisfaction.
Fourth, brokers act as strategic liaisons between companies and insurance companies. L&G Insurance Broker has an extensive network of more than 25 national and international insurance companies, so it is able to offer flexible packages and special riders—such as maternity, optical, and mental health coverage—that are rarely available on the general market.
With a combination of technical expertise, personalized service and a broad network, L&G Insurance Brokers ensures your company’s health insurance is not just protection, but an investment in employee well-being and productivity. Entrust your health insurance needs to L&G—a strategic partner who understands your business and is committed to accompanying you every step of the way.
Conclusion & Recommendations
Health Insurance The company is proven to be a strategic investment that offers various benefits: reducing absenteeism through fast access and preventive programs, strengthening employee retention and loyalty through a competitive EVP, and providing long-term financial protection with premiums commensurate with potential claim costs. The ROI study also confirmed that insurance premiums will “pay off” unexpected medical costs within a few years, followed by profits from wellness programs and case management.
Recommendations for HR & Management:
- Needs Audit: Conduct an assessment of employee health profiles and current benefit gaps.
- Broker Consultation: Collaborate with L&G Insurance Broker to get the optimal insurance package and negotiate the best rates.
- Pilot Program: Trial group scheme on one division to measure impact before full scale rollout.
Start investing in employee health today—because team well-being is key to a company’s productivity and sustainable growth.
Looking for insurance products? Don’t waste your time and contact us now
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: oktoyar.meli@lngrisk.co.id
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