Group income protection should remain the focus for sector growth in 2017 and beyond, according to Canada Life.
Paul Avis, marketing director at the life company, said research it had carried out suggested as many as 74 per cent of employees believed state disability benefits would be harder to get or reduced in future.
This awareness that the state can not be relied upon to cover employees’ expenses if they fall ill, may spur interest and growth in group income protection, he said.
“Planned reductions to the employment and support allowance (ESA) and work related activity component (WRAC) planned for April 2017 may ignite some further opportunities for group income protection,” Mr Avis said.
He added that by aligning the work related component of ESA with Jobseeker’s Allowance, around 50 per cent of all group income protection schemes which retain a state deductible – for example 75 per cent of salary minus state benefits - will need to take account of an increase in benefits payable by the insurer, rather than the state, or amend the scheme design.
“There is a need for the UK group risk industry to further simplify the group life assurance product, increase the number of group income protection claimants who are returned to work and try to get the ‘benefit in kind’ status removed for group critical illness cover,” Mr Avis said.
“The issue of welfare reform is possibly the most transformational and important in the current environment.
“There are many ways the industry can help, which are currently being explored – and group income protection, once again, should remain as the focus for growth for 2017 and beyond.”
laura.miller@ft.com
