Insurers and intermediaries looking to grow their group risk books are able to ride on the back of two of the most disruptive trends the world has seen for a generation.
An increased focus on health generally became obvious after the outbreak of the Covid-19 pandemic. By August 2020 MetLife research found that that 68 per cent of employers agreed that their employees’ work values were now focused on self-care, health and wellbeing.
But the added-value features on group risk products that were proving so popular with remote workers have also been appreciated for their ability to help employers meet environmental, social and governance (ESG) objectives.
Nick Homer, head of market management, corporate risk at Zurich, says: “The conversation with intermediaries has absolutely changed. It’s all about sustainability now, and anything that can help you support your workforce is considered relevant.”
The add-ons provide an opportunity to target genuine new business, particularly by leveraging existing relationships in other business areas.
Ed Watling, senior employee benefits consultant at Mattioli Woods, says: “Cross-selling has been very relevant recently in terms of general employee wellbeing, and is being led by wellness add-ons rather than insurance. They offer financial, mental and physical wellbeing wrapped into one, and are one of the main things we mention when looking for new clients.
“We cross-sell a lot automatically from different sides of the business, and all our pensions clients should hear about opportunities to take out group risk and wellness schemes.”
General insurance clients, helped by their industry bodies embracing protection more, can provide especially rich pickings. Last year, the British Insurance Brokers’ Association (BIBA) partnered with Group Risk Development (Grid) to launch a guide to business key person and employee protection, and the Chartered Insurance Institute (CII) produced an income protection guide.
Towergate, which is gaining group risk business via its general insurance and individual protection arms, also highlights the importance of cross-selling within its own employee benefits division.
David Williams, head of group risk at Towergate Health & Protection, says: “So many employers only have one product from group risk and wellness, so we try and establish what they’re aiming to achieve and what their employees actually want. Some of our clients carry out their own internal research and sometimes ask us to help with this, and to benchmark and interpret the results.
“A few insurers have created pathways for different illnesses in their group income protection support, so it’s much clearer for all parties what their intervention capabilities are. This can help attract companies on the new business front.”
Investment by insurers has also given them access to data which can be used to make further enhancements to wellbeing offerings. For example, Aviva, by monitoring data provided via its Digicare+ Workplace app, can assess any gaps in employee health needs that require addressing.
Embarrassment of riches
The fact that intermediaries make little mention of things insurers could do better to help them represents a marked turnaround from a few years ago.
Indeed, Steve Ellis, head of employment benefit consulting at Prosperis, complains of too much of a good thing, arguing that an embarrassment of added-value riches is causing problems for client organisations – who struggle to work out which ones to use.
Ellis says: “We recommend which add-ons are most appropriate for our clients’ needs but HR want simple solutions. So, I would like to see providers offering dumbed-down products to those who already have these add-ons, maybe with a discount if the intermediary can prove the client doesn’t need the benefits.
“Inflation is going to result in premium increases, so we will have to start looking for value for money to combat this. So, asking for discounts could be a way of doing this.”
But insurers give the idea short shrift, emphasising that the services have been priced into their product suites and depend on obtaining cost-effective bulk deals from providers.
Colin Fitzgerald, distribution director, group protection at Legal & General, says: “We have sympathy but we can’t start unpacking the price. It would be far too difficult.”
Homer also highlights important tax considerations. Although there are exemptions relevant to some add-ons, broadly speaking, if most were actually provided within the product there is a risk that premiums would be subject to VAT.
He says: “The added-value services aren’t actually part of the insurance contract but are provided free of charge on a non-contractual basis and can in fact be withdrawn or amended at any time.
“Group risk contracts, on the other hand, run in perpetuity and aren’t subject to actual renewals, but to reviews that trigger re-broking exercises. They therefore avoid IPT (Insurance Premium Tax), unlike like general insurance.”
Nevertheless, providers are excelling in the free training and support materials they are offering, and these can be invaluable for intermediaries that wish to increase their group risk business volumes but feel that joining Grid is a step too far.
The Grid Opportunity
One way for intermediaries to increase their potential for conducting group risk business is to join Grid, which provides access to group risk training, industry statistics and research not available elsewhere.
The body already has 39 adviser/intermediary members – 15 of which have joined over the last three years.
Grid spokesperson Katharine Moxham says: “Most intermediary members already do group risk but there’s no reason why general insurance intermediaries who don’t yet do so shouldn’t join. Further interest from the general insurance field would really help push the group risk field forward.”
There’s no limit on the numbers of employees from Grid member firms that can attend live training sessions, and all sessions have been recorded so that they are readily accessible going forward.
The Grid Training Academy has delivered the following live online sessions over the last
- A six-part introductory course on group risk, with an accreditation test
- An intermediate session on flexible benefits and group risk
- A two-part advanced session on group life taxation and trusts
- A session on reinsurance, pooling and captives
New insights tool providing fruitful
Intermediaries seeking to expand their business were given an innovative new dimension this May through Legal & General’s launch of a partnership with Fruitful Insights, which provides an analytical tool to quantify the impact of employee wellbeing on productivity.
Jo Elphick, marketing director, group protection at Legal & General, says: “We feel this completely changes the conversation between the intermediary and the employer because it enables the intermediary to really consult rather than just broke. Intermediary response has been excellent.”
Access to Fruitful Insights (see CEO Mike Tyler profile on P16) is available to all the insurer’s group income protection clients with over 100 lives. The aim is to work with the company to gain an indication of the costs associated with impaired wellbeing and productivity and factors underpinning them.
Based on this, intermediaries and their clients will be able to identify priorities, action plans and follow-up assessments to help improve wellbeing and performance.
Employees, who are surveyed individually to get their views on their employer, also enjoy an immediate output, receiving their own health and wellbeing report and a list of all the benefits the employer has bought on their behalf.