Group risk is having a moment

  • Describe the importance of group risk
  • Describe the significance of Early Intervention Services in group risk policies
  • List the commercial changes of the group risk market
Group risk is having a moment

The UK Group Risk market market now covers 12,458,147 people (378,062 more than recorded in the 2017 survey) and is worth more than £2,212,937,727 in annual premiums - a 5.1 per cent  increase on last year’s figures.

Disappointingly however, there are only 74,439 schemes in place. Increasing the number of new-to-market employers is clearly a big challenge for the market.

As a benchmark, the usual start point for employers buying group risk benefits is to have a Registered Group Life Assurance scheme. There are 43,770 of these.

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However, of the 1.8m organisations that could have group risk benefits, less than 2 per cent actually do. To contrast, 98 per cent do not have group life, 99 per cent do not have group income protection and 99.8 per cent do not have group critical illness.

Current market

2017 was a very good year for group insurance in the UK. It is important for that point to be made early as, on the surface, the story is a positive one.

The following paragraphs are going to be spent picking apart the market’s performance. It is only because we are so close to the picture that we can see the cracks, and it would be unfair to detract entirely from the achievements of last year.

The headlines for the year were positive, according to the figures published by Swiss Re in their annual Group Watch report. Benefits covered increased across the board, by 5.8 per cent, 8.1 per cent and 7.9 per cent for GLA, GIP and GCI respectively.

These increases look even better from the customers’ perspective as they were accompanied by lower levels of premium increases: 4.3 per cent for GLA, 6.3 per cent for GIP and 7.4 per cent for GCI.

Benefit growth is outstripping premium growth. In general, employers are getting better deals and insurance providers are seeing shrinking profit margins.

Benefit growth is underpinned by increasing numbers of policies being taken out and, on the whole, an expansion in the number of people being covered. Almost 12.5m people are now protected by the industry.

This is great news because scale means we have credibility – not just in numbers but when telling a story about how UK employers are providing financial security for their employees.

Again, this is not a universal improvement. There is a clear divide evident in GCI.

Employer-paid policies saw a reduction in people covered by 6.8 per cent; meanwhile people covered by flexible benefit policies, in which employees can choose to fund cover from a selection of product choices, grew by 0.8 per cent.

Flexible benefits are the larger share of the UK GCI market, so while there was a reduction overall it was not as dramatic as it appears.

Flexible benefits continue to show great promise and the market is growing well – yet it is another double-edged sword for insurers. Employee choice should be embraced as it is certainly in the interests of the people our products are ultimately designed to be of use to.