Income Protection  

Demystifying the UK group risk market

  • Describe the background to the group risk market.
  • Identify the group risk language that is holding the market back.
  • List what the government is doing to have a positive impact on the market, and what the future holds.
Demystifying the UK group risk market

There are even more employees and premiums but still too few employer customers purchasing group risk benefits.

Insurer capability

While there is a genuine focus on the engagement and utilisation potential for in-house and outsourced support services to complement the financial benefits of group risk, the more ‘business as usual’ aspects of the market need to be attended to and ideally improved.

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The service challenge, the area where advisers see the biggest issue, is in intermediaries 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 degree of market under-penetration is simply astonishing.

Furthermore, all of the market average indices were down in the latest ORC International Group Protection Track 2018 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 16 per cent reduction on both proposition and 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.

Canada Life has been looking into this area recently, making no assumptions about the suitability of any of the language it uses.

We chose to begin at the very beginning – what the 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 (GIP) 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.