The service challenge, where advisers see the biggest issue, is in making profits on growth in the small and medium enterprise (SME) segment of employers. With few group risk insurers having an end to end administration system, and a limited amount of quotation portals available, they struggle to justify investment in growing the market.
The continual obsession for independence, the perceived need to do whole of market reviews for smaller employers in a transactional, online world, has undermined new to market growth for insurers that do have the systems in place. As a result, the market under-penetration is astonishing.
Furthermore, all of the market average indices were down in the latest ORC International results, showing that advisers felt less confident in UK insurers. The disconnect between how the market was performing on Group Critical Illness (GCI) showed the disparity between the perception and the reality of the market – the GCI market has grown but advisers reported a 14% reduction on proposition and 15% on pricing..
Welfare reform is having a positive impact, such as reductions in death and disability benefits from the State. These areas of policy enjoy a degree of prominence in the public discourse and provide a convenient launching point for conversations about protection benefits. These conversations are not always easy to have. Group risk is a historically niche set of products and has, over the decades, developed an idiosyncratic suite of technical jargon which can be all but impenetrable to the uninitiated. When your industry’s big challenge is growing the market, dizzying the people you are trying to persuade of your value is not a positive step.
We have been looking into this area recently, making no assumptions about the suitability of any of the language we use. We chose to begin at the very beginning – what our products are called We know “free cover level” and “deferred period” need simplifying, but does the average person in the workplace have any idea what “Group Income Protection” means? If not, you will have an uphill struggle to explain to them why it is a good idea to have it. Childcare vouchers, cycle to work schemes, discounted gym memberships – the benefits of these things are self-evident and will stand out to people who can make use of them. We are not doing ourselves any favours in getting that psychological foot in the door.
To investigate this, we described two products to HR decision-makers and asked them to pick from a list of names which they thought was the easiest to understand in relation to the descriptions given. Those two products were Group Life Assurance (GLA) and Group Income Protection (GIP). There was bad news for GLA – of the half a dozen or so options given, the current name placed flat last with only 8% of respondents selecting it. There was no clear-cut favourite from the alternatives unfortunately, but there was a ray of light. We asked a similar question to an unfiltered cross-section of employees, and of the options presented both groups did choose the same name as the top result. “Employee life insurance” commanded the votes of 20% of HR professionals and 37% of employees, which gives us a starting point for further research.
The picture for GIP was somewhat more positive; GIP came in second place with 17%, but was a long way behind the favourite: “long-term sickness salary”, with 28%. Again, we asked this question to a broader base of employees and, again, both groups selected the same top response. As with GLA, employees were more decisive than their HR colleagues – long-term sickness salary was supported by 43% of employees, with the next favourite languishing on 32%.
The key difference between the two methodologies was that HR professionals were asked to select the name they thought best explained the product that was described to them, while employees were asked which of the presented names they felt described the products better than the existing names, which they were provided with. Employees were given an option not to change the names, if they felt they already did the job. These were taken by only 4% for GLA and 11% for GIP – hardly ringing endorsements of the current naming conventions! .
This is an area we will continue to research and encourage our industry colleagues to do the same. We know that when people understand the value group risk products can add to their organisations they are typically happy to make the purchase. Our aim is to remove jargon as a barrier to market growth. We have mature propositions in our industry, and many initiatives over the years have sought to bring group risk to the masses with varying degrees of success. Perhaps the time has come to direct our efforts a little closer to home.
Paul Avis is marketing director of Canada Life Group Insurance