Zurich is making plans to grow its group risk market by focusing on smaller businesses after securing exclusive distribution rights to Lloyds’ corporate clients.
The insurer’s workplace pensions and savings business is to be sold off to Lloyds along with assets under administration of more than £15bn and 500,000 customers, it was reported today (12 October).
As part of the deal, which went ahead for an undisclosed sum, Zurich will receive exclusive distribution rights for group life protection to certain corporate clients of Lloyds Banking Group’s commercial banking services.
Nick Homer, head of market management for Zurich Corporate Risk, told FTAdviser the deal would help Zurich to grow the overall group protection market.
He said: “The new distribution deal with Lloyds Banking Group for us presents a good opportunity to increase our focus on the small and medium enterprise (SME) sector of the market, helping us to widen our market and grow our business further.
“The group risk market is a very resilient market and has stayed strong in tough times, but it has been a bit disappointing in recent years in terms of growing the market.
“We are hoping this deal gives us the opportunity to promote group income protection and group life to many commercial organisations that have not considered it in the past.”
Mr Homer gave assurances that there would be no conflict with Zurich’s established intermediated market.
He said: “The beauty of working with the bank is they have already got strong commercial relationships with employers, so it is very much a build on those relationships.”
Paul Avis, marketing director at competitor Canada Life Group Insurance, commented: “There has been an ongoing frustration in the group risk market about the lack of penetration into new employers. While the market has grown exponentially in terms of employees, and therefore premiums, there are some simple facts that cannot be overlooked.
“With around 42,500 registered group life schemes, 17,200 group income protection schemes and 3,200 critical illness schemes, we have a market that is underpenetrated by 96 per cent in group life, 98 per cent in group IP and 99.8 per cent in group CI.
“Clearly, there is an opportunity for advisers with pension schemes to sell group risk proactively alongside the pension and healthcare policies they already have – but the key word here is proactively, and so the news today reinforces that message to advisers.
“You have the gift of employee data and employer relationships, and should be doing so much more to develop the group risk market, because if you don’t, others are showing they will take that opportunity on.”
Roy McLoughlin, associate director at London-based Cavendish Ware Wealth Management & Financial Planning, commented: “Anything that means people have more access to group life is a good thing, clearly.
“The more publicity that this gives to those most important of group benefits, the better. The fact is that only 8 per cent of employees have group income protection, and we need this to be expanded – particularly with changes to welfare reform.”
simon.allin@ft.com
