This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
By Emily Pickrell
Aug. 4—The demand for private disability insurance in Mexico is greater than in countries with higher average incomes, according to a recent study by Zurich Insurance Company.
Despite a state system that provides disability insurance for a range of ailments, more than 70 percent of Mexicans have considered purchasing income protection insurance compared with 52 percent of German workers and 37 percent of Australians, according to a Zurich study that compared worker views on the need for income-gap protection in 12 countries.
One of the biggest drivers for Mexican interest in disability insurance is the high number of workers in the informal sector. Less than half of Mexican workers were in the formal sector in 2015, according to Mexico's National Statistics Office, excluding them from the automatic benefits provided by the social security system.
“Limited social protection and uncertain working conditions mean that Mexicans are more aware of the need for income protection than people in other markets,” the report said, noting that 79 percent of Mexican respondents indicated they would accept a lower salary in exchange for disability benefits.
Mexican workers in the formal sector are covered for both work-related disability and general illness disabilities through the Mexican Social Security Institute (IMSS). Incapacitated workers can receive disability benefits (and medical treatment) for a range of reasons, including accidents, illnesses and pregnancy.
A worker on disability will receive 100 percent of his or her salary for up to two years, though this amount is capped at 25 times the minimum wage, which is currently about $4.00 a day.
“After that, the IMSS will have to determine whether you are fit to continue working or if you have a permanent disability,” said David Leal Gonzalez, a senior associate with a Mexican branch of Littler, an international employment law firm. “If you have a permanent disability, it will have to say how much is the percentage based on the nature of the disability. They will pay you based on the percentage of your daily salary for life.”
Despite these benefits, more than half of those surveyed who had lost income due to a disability said they had to use savings to cover the earnings shortfall, while 44 percent said their families had provided additional support, the Zurich report said.
Currently, private disability insurance is typically coupled with private medical insurance, and such packages are usually limited to mid-level executives or higher, Leal said.
While informal sector workers are not automatically included by the IMSS system, they can participate if they pay the premiums that both an employer and an employee would otherwise pay into the system, which range between $200 and $500 a year, depending on age.
“It is an important sector that has no income protection,” said Radames Lopez, the head of corporate, life and pensions for Zurich Insurance Mexico.
The popularity of private disability insurance is increasing, Lopez said, noting that the disability and life insurance market in Mexico is estimated to be more than $13.5 billion and is growing at about 7 percent annually.
Human resources experts, however, caution employers that workers expect any new benefits, such as private disability insurance, to be maintained, given Mexico's history of strong labor protections.
“Any benefit or slate you put in, you are sort of stuck with that level and it has a huge impact on how employees see things,” said Harry Jones, an international employment lawyer with Littler in Dallas who focuses on Mexican labor issues.
To contact the reporter on this story: Emily Pickrell in Mexico City at correspondents@bna.com
To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com
For more information on Mexican HR law and regulation, see the Mexico primer.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)