Actual and perceived costs are the main barriers to employers offering group income protection (GIP), with awareness of the product and incentives key to increasing coverage, research from Group Risk Development has found.
The findings come with just over a week to go until the closing date for submissions to the DWP/DH Improving Lives Work, Health and Disability Green Paper consultation, which closes on 17th February.
Conducted among industry leaders at Corporate Adviser’s Healthcare and Group Risk forum in December 2016, 45 of delegates believe that perceived cost is the main barrier to larger corporates offering GIP, and 62 per cent said it is a mixture of actual and perceived costs that hold smaller employers back.
The findings support Grid’s employer research which showed that, out of those employers who did not offer GIP, 26 per cent thought it would be too expensive and 60 per cent thought GIP would cost more than it does.
Delegates indicated that a mix of things was needed to encourage larger employers to offer GIP. Financial incentives came out as the most popular answer, with 29 per cent citing this as a priority. Other ideas included helping employers to understand return on investment and how it can support absence management, better education & awareness and ‘borderline compulsion’.
The focus to encourage smaller employers should be around better education, awareness and simpler products said delegates, with 42 per cent believing such steps are needed to get SMEs on board. A further 31 per cent said financial incentives would be necessary.
Grid spokesperson Katharine Moxham says: “When cost is put forward as an issue, what employers are really saying is they don’t understand the value. There will always be demands on budgets and what the findings show us is that we need to get better at making the business case for group risk financial protection – employer-sponsored life assurance, income protection and critical illness.
“The value is there to be had and it is important that it is communicated. We need to move the conversation on from cost and talk about value. Employers that make use of group income protection can’t sing its praises highly enough, and the findings show us that as an industry we need to do more to talk about the great value that group risk financial protection provides.
“As the group risk industry body, Grid will be responding to the consultation but it’s important that advisers and employers make their own views known too as weight is given to the number of responses making the same or similar points.”