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.
The scheme sizes flex a little each year, but the actual scheme numbers (the number of employers purchasing cover) do not significantly shift; it is largely the same business getting shifted around between the biggest employee benefit consultancies in the UK.
Insurers are keen to access the SME market. Some will now insure schemes as small as two or three lives, but the norm is around five to 10 lives minimum.
Plus, insurer offerings are more flexible and engaging than ever before it seems.
Colin Fitzgerald, distribution director, group protection, Legal & General, says: “Flexibility and engagement used to be an issue, but the group risk market has made huge strides in both respects.
On flexibility, there are now limited term products, most insurers will allow employers to have multiple categories of employees, plus new digital, mobile first, solutions – like Legal & General Protect – have brought personalisation to group protection, allowing employers to offer great value cover that can be tailored to the specific needs of their multi-generational workforces, thereby complementing Flex schemes; bringing choice of cover, not just choice of benefits.”
Other key group protection insurers include: AIG Life (which bought SME specialist Ellipse in early 2019), Aviva, Canada Life, Generali UK Employee Benefits and Unum.
Some providers offer an online solution for SMEs with enhanced terms. For example, Canada Life’s CLASS online platform provides cover from just two lives, with rates guaranteed for three years, and comes with a range of health and wellbeing services, including access to a 24/7 UK based GP and mental health support.
Many providers also offer their own group life trust solutions, to avoid the need for smaller employers to establish and manage their own trust arrangement. “Also, provider intermediary portals are helping to facilitate the placement of SME group risk business,” says Nick Homer, head of market management, corporate risk, at Zurich.
Meanwhile, Generali UK Employee Benefits specialises in group protection for UK based multinationals, also offering multinational pooling for mid-size companies.
So, there seems opportunity. And insurers are certainly keen. But what do SME employers think?
There is lots of evidence showing that leaders want to ‘do’ wellbeing. And confirming that engagement with benefits is now a top HR priority.
