Consumer demand – the best insurance for our industry

The group risk sector is like a cat that has used up most of its nine lives, says Simon Derby, director of i2 Healthcare

In January an email/press release popped into my inbox stating “Jubilation for group risk sector as exemption granted on default retirement age”. I was neither jubilant nor stirred – it was after all the only sensible thing the Government could do, align employee benefits with state retirement age. Like the proverbial cat, the risk business survives as another of its lives is lost.

So after all the panic of a feared decimation of the risk market and all the hype over a future where limited term benefits will rule, not to mention all the potential consultancy fees spent, we are actually in a better position than when we started as it now appears that employers do not have to provide benefits post state retirement age.

The cat has survived age harmonisation and the recession is doing it no favours, with API reduced, employers reducing headcount and businesses cutting costs or worse, closing down.

Grid has done a good job in influencing the government’s thoughts and allowing us, the group risk industry, to align our limitation on cover and expense with the state retirement age. But there are still issues to be resolved and potential uninsured liabilities for employers in risk arena.

So will we learn anything from the whole DRA exercise? Because if the default retirement legislation had gone the wrong way it could have decimated our market place at a stroke. We must therefore do something to promote risk to a wider audience or attacks on the industry may prove too close for comfort next time.

We all know there is a big gap in the income protection, life and critical illness cover in the workplace, with many employees having inadequate or no protection at all. Crucially, those that do in many cases do not value the risk benefits they have.

What do we do as an industry promote group risk to the masses, the end user? Aside from Unum’s welcome planned campaign due to start in the summer, nothing

We also all know that our industry has the tools to address absence in the workplace due to illness and injury, and we know the cost in percentage of payroll terms of filling the protection gap is zip.

But what do we do as an industry promote group risk to the masses, the end user? Aside from Unum’s welcome planned campaign due to start in the summer, nothing.

We as an industry have been adept at failing to capitalise on opportunities presented to us. Welfare reform is one example. We all know that state benefits are being targeted by the Government with the aim of reducing the dependency on the State, costs and benefits culture. Most of us are aware of the failings in the “fit note” and its ambiguities and in many, or is that most, ill and injured employees do not qualify for ill health state benefits as they are deemed capable of doing “some” work.

Strange isn’t it that when we had A-Day back in 2006 there was a lot of excitement regarding the expansion of the life market, higher levels of cover, more awareness and the rest. What happened? Very little. The cat got a life back, but it was wasted.

So onwards we go into the unknown – but wait a minute, we all know the future, don’t we? Pension compulsion, high inflation, the London Olympics, continuing spending cuts , little or no pay rises, food and fuel costs soaring, increased rates for risk schemes (it is already happening) and little or no growth in the new-to-market schemes. A bleak picture indeed and on top of all of this we want to grow the risk business.

At present we are still not getting our message out to the masses. We need to push group risk up the corporate agenda.

The industry needs to spend money telling the masses that group risk is good and welfare benefits are not as Unum is planning to. And if that does not work then let’s try and get an intelligent story line in the nation’s favourite soaps to get the subliminal message out there. This cat only has so many lives left.