Disability claims linked to psychological distress have surged, exposing how often early signs go unnoticed or unsupported. Presenteeism – a phenomenon in which employees are present, but not engaged, often driven by untreated mental health issues – is quietly draining productivity, and employers who treat wellbeing as an optional extra are paying the price, in claims and in lost talent.

“Mental health has become one of the most significant drivers of income protection claims, and the fastest growing,” says Brice Salence Nunes, Head of CVP Group Assurance at Old Mutual Corporate. “And that changes everything when it comes to how we think about protection in the workplace.”

That shift is not just statistical. It’s conceptual. Mental health is challenging long-held definitions of disability, forcing employers and insurers alike to rethink what it means to be “unfit for work”. “It underscores a reality we can no longer ignore; when the mind is unwell, so is the person,” says Salence Nunes. “And that’s exactly why integrated benefits are no longer a nice-to-have. Siloed approaches simply don’t work when the risks – mental, physical and financial – are this connected.”

A hidden crisis comes to light

Group risk benefits, which cover death, disability, and income protection, have historically been designed around clear, physical events, such as a heart attack, a car accident, or a life-altering diagnosis. But today, it’s mental health that’s driving costs and complexity. And the financial impact is staggering.

As shown in the graph, mental illness now accounts for over 16% of group income protection claims, up from just over 10% in 2015. More than 65% of these claims are due to major depressive disorder, according to Old Mutual’s latest claims data.

That’s just the claims side. On the ground, the business impact adds up fast. A 2024 survey by the South African Depression and Anxiety Group (SADAG) found that employees with depression take an average of 18 days of sick leave per year. Globally, depressive disorders now account for more Disability-adjusted Life Years (DALYs) than HIV/Aids and are on track to surpass tuberculosis. DALYs reflect the number of healthy years lost to illness, disability, or early death, with far-reaching consequences for individuals, insurers, and the economy.

“This rising risk has direct financial implications,” says Salence Nunes. “The more healthy years lost to poor mental health, the higher the claims burden for insurers, and the more employees face reduced time in the workforce, reduce retirement savings, and greater financial insecurity.”

According to the Geneva Association, mental health-related disability claims now cost insurers more than $15 billion a year globally. In South Africa, unaddressed mental health in the workplace is estimated to cost the economy R19 billion annually. “This isn’t just a healthcare problem,” says Salence Nunes. “It’s a systemic risk that affects productivity, increased claims, and workforce stability.”

Why prevention must replace payouts

In most organisations, group risk still operates on a delayed trigger. The benefit only kicks in once a formal claim is made. But by then, it’s often too late. This reactive model does little to address the slow build-up of stress, fatigue, or undiagnosed mental health conditions that quietly erode capacity long before a claim is filed.

“Waiting for claims to materialise is no longer viable,” says Suzette Müller, Corporate Consultant at Old Mutual Corporate Consultants. “We’re dealing with conditions that require earlier intervention, multidisciplinary support, and more integrated approaches to employee wellbeing.”

At the same time, the need for more comprehensive and flexible benefits is growing. As the workforce becomes more fluid, remote, and fragmented, traditional one-size-fits-all models are increasingly out of step with how people live and work today. Without redesign, the cost of inaction will only escalate – in claims, talent loss, and long-term financial insecurity for employees.

The business case for proactive and flexible wellbeing

Fortunately, the solution isn’t just about spending more – it’s about spending smarter. Organisations that invest early in employee wellbeing are seeing results. “The literature shows that integrated wellbeing strategies not only support employees, but also drive down costs, improve retention, and create lasting business value,” says Müller. “Progressive employers are discovering that proactive mental health support generates measurable returns.”

Reducing claims costs also creates financial headroom, allowing employers to reinvest in enhanced retirement contributions or expanded benefits. “Providing protections like critical incident cover strengthens support during periods of crisis and sets employers apart in a competitive hiring environment,” says Müller. “This can give employers a meaningful edge in attracting and retaining talent, while supporting employees through life’s most disruptive moments.” 

The benefits extend beyond employers. For insurers, proactive employers mean lower claims frequency and more accurate pricing. For trustees or management committees, integrated benefit models can help balance short-term protection with long-term retirement adequacy, which is a growing concern as benefit costs rise.

“When you design benefits that reflect how people actually live and work today, everyone wins,” says Müller. “It’s not about choosing between cost control and employee support. Done right, wellbeing becomes the mechanism for achieving both.”

Rethinking the role of group risk

Group risk is no longer just about insuring against unforeseen events. In an era of rising mental health claims, chronic illness, and financial insecurity, it has become a frontline tool for building workforce resilience. The challenge now is shifting from siloed claims payouts to integrated, preventive solutions, especially for conditions that develop gradually and invisibly, such as depression or burnout.

This requires a new kind of benefits architecture. One where group risk is embedded in a connected ecosystem that spans mental health and financial wellbeing, and where employees are not just covered, but supported to make informed, confident benefits decisions. That means offering meaningful choice in benefits, while also guiding employees through life-stage responsive defaults that protect long-term outcomes.

Employers and leadership teams play a vital role in unlocking this potential. Benefit structures must support innovation and integration, and hold providers to higher standards – not just in pricing, but in the quality of prevention, flexibility, and employee support they enable. “Flexibility without coherence leads to fragmentation,” says Müller. “But when you align structure with strategy, group risk becomes a tool for empowerment, not just protection.”

Why employers must rethink group risk

As risk trends evolve, employers and HR leaders have a critical role to play in shaping benefit strategies that are both sustainable and responsive. The rise in mental health and lifestyle-related claims, alongside flexible, fluid workforces, calls for governance that is strategic as well as compliant.

The way forward

For employers under pressure to manage costs, retain talent, and meet the needs of a changing workforce, one thing is clear: mental wellbeing is no longer a perk; it’s the foundation of a sustainable group risk strategy. “Doing nothing is already costing more across claims, turnover, and productivity losses,” concludes Salence Nunes. “But the opportunity is real. When group risk moves from reactive payout to proactive support, it becomes more than just insurance. It becomes a tool for resilience, retention, and long-term value.”

 *This article originally appeared in the Old Mutual Mindspace Thought Leaders Forum special issue. To read more, click here.