Steve Bridger, group risk director at Aviva, offers his views on trends and potential opportunities in the group life market.
We’re often asked to give views on potential trends for group life (GL) as a proposition. Where is [the group life market] heading, what could affect providers’ businesses, how employers and employees are viewing the policy and what we could be planning for with those variables in mind.
Go deeper with GlobalData
When it comes to GL, is the glass half empty or is the glass half full? Will the glass pose a risk, and shouldn’t we be underwriting the person contemplating the glass, just in case? It’s no joking matter. A life policy never is, and ‘looking on the bright side’ of a policy that has tragedy as its raison d’etre is a challenging thought.
However, several pragmatists are still battling it out to be considered ‘leaders’ in the field. We’re investing heavily in the promotion of GL as a benefit in kind; evidencing the peace of mind inherent with having a policy in place; putting the spotlight on associated services that benefit families and colleagues, and improving response times to claims. We’re delighted to say that the quality of our own policies makes us an acknowledged major player in the field.
More to do
What’s interesting for us all though, are the dynamics of opportunity in that field. Swiss Re’s Group Watch 2015 showed that the UK group risk market overall grew by 1.9% to the end of 2014. This means over 11m individual people have the potential to benefit from some kind of employment-based risk cover. In-force group life schemes themselves however, increased by only 2.6%.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSo, if there are around 1.4m limited companies in UK, then – according to the Swiss Re figures – only 3.5% of those businesses are investing in GL policies. As I’ve said before, employers are facing so many compulsory spends in other areas, they see group risk products as an unnecessary burden to their bottom line.
Raising the bar
The reality is that the provision of GL policies isn’t getting the focus it deserves from government. Not in the same way that health in, and retirement from, the workplace has in recent years. The spotlight on the value of life policies simply isn’t there yet.
We’d like to see this trend reversed, or at least given more attention in the short term. After all, the pensions industry is seeing massive reform.
We have a general health and work advice service being rolled out to complement existing occupational health services (albeit with less comprehensive rehabilitation services and support than those offered by insurers).
[Looking ahead,] why can’t we encourage a shift in thinking on long-term, planned risk strategies – such as encouraging increased access to protection benefits from the workplace?If that can happen (as we believe it should), then trends should echo those of the new pension framework and the (arguably, slow) uptake of Fit for Work services in Britain.
– There would be an organic, gentle increase in awareness of value among employees, more open to the idea they’re expected to help meet the cost of their own cover
– In return, employees would – inevitably – expect more tangible value for their money: more ‘attractive’ associated benefits (discounts / add-ons) will become a must-have. Sadly, we think these will sway opinions far quicker than the quality of customer claims, rehabilitation services delivered, or evidence of financial strength from the providers involved. Irrespective of the reasons for choosing a policy however, those people would at least be benefiting from cover.
– And, as advisers become the go-to resource for those who are in a better financial position or, at least, those who realise the importance of long-term retirement planning, we think we’ll see greater demands placed on employers. There’ll be more detailed negotiations prior to signing employment contracts. HR departments will, in turn, place greater demands on providers to equip them with the knowledge they need to substantiate their position … and the need for education will, once again, be at the top of our agenda. Sharing knowledge, explaining value.
As to the product itself? For GL, we believe there’ll be a shift to echo the changes in financial planning during each person’s working lifetime. Simpler, more inclusive policies with benefit levels for younger generations that may differ, markedly, from those being offered to people in the mid-stage of their working lives.
And, with more freedom and choice around individual plans, we think we could see GL policies being re-packaged as a more overt, complementary addition to retirement strategies.
The real benefit for employees will occur in the short-term, though, if we all share more information about these products’ value. We need to make ‘more awareness’ a prevailing trend among the large number of businesses that don’t have group life policies already in place…
