Why Corporate Insurance Is Essential For Business Risk Management

4 min read | Updated on May 28, 2025, 13:15 IST

About Upstox

Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.

Mr Sharma, a mid-sized business owner, discussed rising costs with his daughter, Priya, who runs a hiring agency. When he mentioned an insurance agent's suggestion to offer employee health insurance, he questioned its necessity. "My employees are happy. Why add another expense?" Priya responded, "Dad, have you considered how absenteeism, work breaks due to illness, or family stress impact productivity? Employees without health coverage delay treatment, leading to longer absences and reduced efficiency."

Mr Sharma argued, "If someone is sick, they take a few days off and return. Why spend extra?" Priya explained that stress over medical costs affects engagement, and high turnover increases hiring expenses. "A strong health plan keeps employees productive, reduces disruptions, and boosts loyalty. She concluded, "Corporate insurance isn't just a cost—it's a strategy for stability. Protecting employees means protecting your business."

But is Mr Sharma the only one unaware of the hidden costs of ignoring employee health risks? Unfortunately no.

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The Link Between Employee Well-Being And Business Risk

Many businesses, while rapidly adopting the modern working style, are still blissfully ignorant towards the needs of their employees. It leaves them vulnerable to several business risks and liabilities related to employee health, high recruitment and training costs, non-compliance with labour laws, and an increased employee turnover.

Without proper cover or protection against the same, they are left with a tattered reputation in the market, with employees being hesitant to apply for work with them, especially for significant posts. Comprehensive corporate health insurance is the best way to protect your business from catastrophes. It will protect your business from employee-related risks like absenteeism, reduced productivity, turnover risks, and family health issues.

Absenteeism

While many businesses think that employees can simply take sick days off when they do not feel well, they do not factor in how frequent sick leaves disrupt workflow. This is especially true when the person works in a prominent position and cannot be replaced by another, even for a short duration.

Reduced Productivity

When employees have major health-related issues, their presence is not continuous. While absenteeism is a major issue, their frequent absence negatively impacts the business's productivity. The major reason for this is that health concerns lead to disengagement at work.

Turnover Risks

Though a person who is not keeping well is in high need of a stable job so as to be able to pay their medical bills, they would rather look around for a job that provides better medical assistance. Employees are more prone to leave a job due to the lack of benefits, resulting in high turnover.

Family Health Issues

The argument that "hire fit employees" may work for a few, but this approach does not factor in that perfectly fit and healthy employees may still be struggling with stress due to family health issues affecting performance. Therefore, just looking at the employee and his health is not enough.

How Corporate Health Insurance Addresses These Risks

In several instances, the hidden cost of common employee-related business risks is substantial and even detrimental. And the simple solution to ensure your business stays safe from these risks is providing your employees with corporate health insurance. So, here is how corporate health insurance addresses these risks:

Covers Medical Expenses

One of the most crucial things corporate health insurance does is reduce financial burdens on employees, as the insurance covers the medical expenses for the employees and their families.

Wellness Programs And Mental Health Support:

Corporate health insurance includes mental health coverage, offering therapy, stress management, and psychiatric support. It promotes a healthier work environment, boosts productivity, and effectively helps employees manage workplace challenges.

Improves Work-Life Balance

While this might be an indirect benefit of providing corporate health insurance to employees, its result is very prominent and impactful. By securing themselves and their family members, employees with corporate insurance coverage experience reduced external stress, ultimately improving their work-life balance.

Should Corporations Invest In Corporate Health Insurance?

The simple answer is yes. Corporations should invest in getting corporate health insurance. However, this is not only limited to big corporations. Small and mid-size corporations should also invest in it as they are equally at risk of employee health-related costs. Here is how having a comprehensive insurance policy will help your business:

Financial Protection

Corporate health insurance offers financial support to cover costs associated with employee-related risks like absenteeism, reduced productivity, turnover risks, and family health issues, ensuring your company doesn't face significant financial strain.

Business Continuity

A good corporate health insurance policy helps minimize and eliminate the hidden costs of ignoring employee health risks, ensuring business operations continue smoothly.

Reputation Management

Having comprehensive corporate health insurance assists in managing PR and communication efforts, protecting your company's reputation by mitigating the impact of a breach on employee trust.

Legal Support

In case of any legal audit or scrutiny, having corporate health insurance provides peace of mind to you as a business owner that you are in compliance with the legal requirements of the Labour Law Act and other applicable laws.

Business Credibility

Corporate health insurance boosts your company's credibility, demonstrating to your employees that you are serious about their and their family's health and interests.

Frequently Asked Questions

Does a strong health insurance policy increase employee loyalty and reduces turnover?

A strong health insurance policy enhances employee loyalty and reduces turnover by making employees feel valued and secure. It improves engagement, boosts productivity, and reduces absenteeism, ultimately fostering a stable and committed workforce that benefits the business.

Is there any cost-benefit of insurance against turnover and absenteeism costs?

Investing in employee insurance reduces turnover and absenteeism costs by improving retention and productivity. Companies like Google and Microsoft offer strong health benefits, leading to lower attrition, higher engagement, and reduced operational disruptions, ultimately saving long-term hiring and training expenses.

How do health benefits improve a company's reputation and attract skilled employees?

Comprehensive health benefits enhance a company's reputation by showing a commitment to employee well-being. They attract skilled professionals seeking job security and work-life balance, giving the company a competitive edge in hiring while fostering a positive employer brand.

Does corporate health insurance cover pre-existing conditions?

Many corporate health insurance plans cover pre-existing conditions from day one, unlike individual plans that may have waiting periods, but coverage terms vary by insurer.

Can small businesses afford corporate health insurance?

Yes, many insurers offer affordable and customizable corporate health insurance plans tailored to the needs and budgets of small and mid-sized businesses.

Does corporate health insurance include wellness programs?

Many corporate health insurance policies now include wellness programs such as annual health check-ups, mental health support, fitness memberships, and preventive healthcare services.

About Author

Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.