The group risk market continued to grow during 2020, despite the coronavirus pandemic, according to Swiss Re’s latest Group Watch Report.
This wide-ranging annual report shows the total number of in-force policies increased by 3.6 per cent, when compared to 2019. The number of people covered by this insurance also increased, by 1.1 per cent to more than 13m by the end of 2020. This means an additional 150,000 people are now covered by these workplace insurance policies.
The report revealed there was growth across all the main product areas. The total number of in-force death benefit policies increased by 4.1 per cent, while the insured death benefit increased by 3.4 per cent.
Meanwhile, there was a smaller increase in the number of in-force long-term disability income policies, (group income protection) which increased by just 0.9 per cent. However the value of LTDI benefit per annum increased by 6.4 per cent over the year, to over £100bn.
There was also a significant increase in the number of in-force critical illness policies, with numbers rising by 7.5 per cent and the in-force sums assured increasing by 5.3 per cent.
Ron Wheatcroft, Technical Manager, L&H UKI, at Swiss Re and one of the joint-authors of Group Watch 2021, said: “In a challenging year for the global economy, the group risk market proved remarkably resilient.
“Faced at first with widespread uncertainty and forced to adapt to a very different business environment, it responded with agility and was able to support even more employers, trustees and members than it did beforehand. To have achieved such growth in the context is no small feat.”
According to the report, the average membership per LDTI policy in 2020 was 155, up from 146 in 2019, which is the largest annual increase of the last five years. What is more, over 90 per cent of those in force cover SMEs (250 members or fewer), a positive indication of the breadth and variety of businesses supported.
Group Risk Development (Grid) the industry trade body welcomed the report. Spokeperson Katharine Moxham says: “The fact that the market has seen growth over this extraordinarily difficult period underlines the value that employers are placing on being able to support their workforce via group risk benefits.
“This support is not only financial: emotional and practical help is also available on a daily basis alongside a group risk product and these services have come to the fore throughout the Covid-19 pandemic.”
Alongside this market data, the report also published opinions and finding of product providers and employee benefit consultants. Swiss Re says they noted a significant increase in the usage of employee assistance programmes (EAPs) and online GP services as providers moved to digitally-enabled services to support employees during the pandemic.
Wheatcroft added: “What makes this year’s findings particularly notable is not only the positive growth in membership but our respondents’ praise for the way in which the market was able to adapt and execute its policies.
“Whether it be paying claims promptly, relaxing requirements for original paperwork or arranging deferrals to account for the financial impact of the pandemic, respondents were quick to highlight how accommodating providers have been.
“Whilst initial complications were to be expected as the world adjusted to a new normal, providers were ultimately able to demonstrate unprecedented flexibility, as well as delivering relevant guidance on mental health, diet, exercise and other central lifestyle factors for improved wellbeing.”
In order to support continued growth in a post-pandemic environment, Swiss Re believes there is an urgent need for the Government to encourage employers to provide for their workforces, and it is calling for the removal of tax complexity around products that it believes can act as a disincentive for would-be buyers of group risk products.
The Group Watch 2021 report points in particular to the freezing of the Lifetime Allowance announced at the Spring Budget and its potential burden on employee death benefits.
Wheatcroft adds: “The freezing of the Lifetime Allowance up till 2026 has only exacerbated our existing concerns about the application of the Relevant Property Trust rules to Excepted Group Life policies and will leave more employers whose death benefits are in Registered Group Life policies needing to consider what action to take.
“A simple insurance proposition in theory, death benefit provision has become an increasingly complex and expensive administrative hassle in practice. The Government should work to encourage rather than obstruct the simple measures that make people more resilient, especially in cases where the tax collected is practically negligible and disproportionate to the costs of administration.”
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