Unum’s head of proposition development, Andrew Potterton, explains why group life insurance offers employers a chance to offer financial protection for their workforce, and considers what points customers should look for in a group life policy
According to Swiss Re’s Group Watch 2015 report published in April, the number of group life (GL) policies in force last year was only 2.6% higher than 2013 and the number of people covered under those policies increased by only 1%.
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That does mean more than 8m UK workers are now getting cover through their workplace, around 1m more than five years ago.
Not bad progress but not stunning either, and we shouldn’t settle on it – particularly as, over the next two years, employers who have perhaps never considered buying financial protection for their small workforces are going to have to offer them the chance to save for income in retirement and should ideally be thinking about what happens to staff whose health problems disrupt their plans.
With that virgin pensions auto enrolment (AE) territory still to play in, it’s a great time for insurers to be putting out confident messaging and creating value propositions that interest and maybe even energise that target market.
Selecting a GL provider over the years has largely come down to premium, with a wide range of prices to choose from.
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By GlobalDataIt’s a commodity product, of course it is, and rates are always under pressure, but there are far more factors to consider these days than ever before. Understanding the differences between insurer propositions requires comparison effort beyond the price being quoted, which reinforces the need for independent advice.
Factors to consider
So what should customers be looking at when choosing a group life policy?
Service quality is certainly demanding and getting the attention it deserves these days. Providers have worked hard in recent years to address the classic intermediary view that group risk is the poor relation among other financial services for ease of doing business, lagging behind markets such as medical insurance.
Use of technology for quoting and administering business continues to develop and generate efficiency gains. Added value features are giving employers and trustees more options in choosing the offering that works best for them.
Underwriting attitude is an important consideration too, particularly when the CEO and other decision makers in the client firm are looking for significant benefit levels.
The insurer who can get cover in place quickly and without too much interference can compete well. We saw this at Unum when we stopped calling for routine GP reports on large cases, bringing the completion time down significantly.
Not having to set up and maintain a trust has also proved to be attractive. The cost saving and convenience of writing their policies under a master trust such as Unum’s is a key consideration for smaller businesses.
Whilst putting GL cover in place provides meaningful security and sends a clear message about care, essential for a business aiming to be an employer of choice in their area or sector, employers are likely to be looking to offer benefits the majority of staff will appreciate.
Tangible benefits
These tend to have more tangibility and immediacy than death benefits can naturally support.
As an example of bringing the offering into the here and now, we introduced Unum LifeWorks, our employee assistance programme delivered in partnership with Ceridian, which is now available to all customers across all our group risk products.
Not everyone needs four or more times salary; it could be argued an employer buying £50,000 cover for all staff, irrespective of earnings, is doing quite well by them and no-one can say that’s hard to explain.
The world of work is changing. We’re likely to be at it for longer, either by choice or necessity. We’re demanding more flexibility from our employers and we even expect them to be socially responsible.
So it is natural for businesses to consider employee benefits in the widest context and to look to buy whatever gets them the best return on their investment.
As group life insurers, we belong with whatever else employers are offering to staff on health and wellbeing, but we have to compete in that crowded space for their spend: the need for a good price is a given, but whatever we can add to the offering to bring the value closer to home may just convert those who haven’t seen it yet.
