Insurers stepped up their efforts to promote the value of group risk benefits to employers and UK plc as a whole during 2015. Sam Barrett takes a look back at a busy twelve months
Group risk benefits play an important role in an employer’s human resources strategy. As well as forming part of an employee’s reward package, these benefits can also help an employer tackle sickness absence.
With this dual focus, insurers enjoyed a positive year in 2015 with plenty of signs of growth going forward. For starters, sales figures from Swiss Re’s Group Watch 2015 showed the market had continued to build on growth seen in earlier years.
The report found that an estimated 200,000 more people received life and disability insurance cover arranged by their employers in 2014. This adds to the “very strong growth” of 300,000 new people in 2013 and means that, since 2010, almost 1.25m more people are insured under group risk schemes.
A number of factors are helping to put group risk on the agenda. These include improvements in the economy and the continued roll-out of pensions auto-enrolment, which have made employers think about the benefits they offer, but also the launch of the government’s Fit for Work service, which has highlighted the role of occupational health interventions.
Insurers were also able to demonstrate the value of their products to employers. A good example of this is the study, Income Protection and Rehabilitation – Working Together, undertaken by economist Kyla Malcolm on behalf of Zurich. This put a figure of £110m a year on the value of rehabilitation, meaning that for every £1 spent on it, cost benefits of £16.80 are generated because it enables people to recover and return to work more quickly.
Similarly, research by Group Risk Development (GRiD) showed an improvement in absence rates, with two in five employers surveyed saying there’d been less sickness absence in their organisations. Almost two thirds (62%) of them put this down to improved employee morale, but a fifth (21%) said it was due to health and wellness initiatives in the workplace.
With more attention on group risk, insurers have been busy enhancing existing products and launching new ones. For example, Unum plumped up the cover on its group critical illness policy, adding seven medical conditions to take the total to 40 and extending the scope of many of the insured events. It also added its AgeingWorks online portal for elder care support and guidance to all its group risk products, in recognition of the growing number of employees facing eldercare responsibilities.
The arrival of auto-enrolment responsibilities among smaller organisations was also heeded, with Canada Life Group Insurance launching a simple life assurance product for businesses with two to fifty employees.
The product, which is available on the CLASS platform, uses basic pensions data – including name, sex, date of birth and optional salary – to automatically provide quotations for 1x and 2x salary and fixed benefits of £25,000 and £50,000. In total, it claims, the full quotation and on risk process can be completed in less than five minutes.
Digital group risk insurer Ellipse also targeted the smaller end of the market with the launch of its workplace absence and disability insurance product, Sick Pay Complete, for groups with up to 300 employees. This is designed to help employers deal with the issue of absence in the workplace by providing an online absence management system alongside long-term disability insurance for employees.
As well as promoting the value of group risk benefits, mental health was an important focus for the market in 2015. Although research by Willis PMI Group found that only 7% of employers said they’d do nothing if they suspected an employee was suffering a mental health problem, there was also plenty of evidence that these types of disorder were still a major problem in the workplace.
As an example, research undertaken by a team from Manchester University found that mental health is the most common work-related ill-health problem across the UK and Republic of Ireland, knocking musculoskeletal disorders into second place. Similarly, research by Mind found that less than 10% of people with a mental health illness found a job after using the government Work Programme, which is designed to help people find employment.
Given this, insurers have promoted the support they provide to employees with mental health concerns. For example, Unum extended its LifeWorks proposition to its group critical illness customers, giving them access to an online and telephone EAP service.
With auto-enrolment helping to boost take up of pensions, the group risk industry has also explored whether this approach would be appropriate for its products. But, while making group income protection mandatory would significantly increase sales, few believe an auto-enrolment model is right. For example Lee Lovett, elected chair of GRiD, said it was unlikely that there was much appetite for this among businesses or politicians.
Some believe the solution needs more of a carrot than a stick approach. For instance, Unum called on the government to consider a temporary tax relief for SMEs that offer group income protection to their entire workforce. This, its head of public affairs John Letizia argued, would benefit all parties and be the most pragmatic option.
But, whether or not the government takes step to encourage take up of group risk benefits, with sickness absence on more and more employers’ agendas, 2016 should be another strong year for the insurance industry.