How to advise on group protection with confidence

  • Describe some of the opportunities with group risk products
  • identify the minimum number of lives usually covered
  • Explain how advisers can gain more confidence with group risk
How to advise on group protection with confidence

A hugely uninsured market. An interested and willing employer audience, especially where employee mental health support is concerned.

A familiarity with the need for – and the value of – advice thanks to auto-enrolment. And a growing number of individual protection intermediaries with an appetite to reach new markets; many with business owners already on their books.

All in all, it reads like a recipe for success. So, why are not more intermediaries diving into the group protection market?

The fear factor is holding them back, according to Roy McLoughlin, associate director at Cavendish Ware. He says: “I speak to numerous network advisers across the UK and there’s lots of interest in the group market, but there’s fear about how to approach corporates and what to do when you get there, especially where the ‘in’ is mental health and wellbeing support.”

At the same time, the opportunity is potentially “vast” he adds. “There is currently the biggest open door. SMEs are now seeking out information and solutions with regards to strategic mental health support. They’re curious as to how a benefit structure might help. There are also cross-selling opportunities. From things like key person and loan protection, the discussion can be extended to the protection and wellbeing of the company’s people. 

“But advisers new to this definitely need support and training, because the fear factor dissipates with confidence and knowledge.”

Alan Knowles, managing director of Cura Financial Services, adds that there are some “incredible benefits” afforded by group risk to schemes of all sizes, such as free medical underwriting limits, which increase with the size of the scheme, the ability to insure huge amounts of people in one application, tax deductible premiums – on group life and group income protection – and rehabilitation / employee support programmes that are often built into these policies as standard.

That said, the contracts might look a bit daunting at first, plus there are lots of complexities; with regards to the environments in which these products sit, as opposed to the products themselves, which are essentially the same, whether individual or group.

So official training and ongoing support is key. Also, some intermediaries may also find that moving from indemnity commission to level commission a bit of a shock, in the short term at least, adds Knowles. Although insurers are usually happy to pay fees. More on this later.

So, what’s the true extent of the opportunity? What are the hurdles? And how can intermediaries access the support and training they need?

The opportunity

There are currently around 1.4m ‘employing’ SMEs in the UK (out of an estimated total of 6m SMEs; 99.9 per cent of the business population, according to the Federation of Small Businesses). 

Only around 11 per cent of the total UK workforce is covered by group income protection, and these are mainly people who work for the biggest corporations; that 0.1 per cent of the business population.