The decline in group risk premiums slowed significantly last year, and death benefit and critical illness sums assured increased by over 7 per cent, according Swiss Re’s latest Group Watch report.
In-force sums assured grew in excess of premiums across all product lines in 2010, reflecting the competitive nature of the market, with death benefit sums assured increasing by 7 per cent, critical illness sums assured by 7.6 per cent and long-term disability income benefits by 1.6 per cent.
Overall, in-force group risk premiums fell by 1.8 per cent compared with 2009, with £1.485bn of business written. But Swiss Re says the results indicate the beginning of a recovery following an overall fall in premiums in 2009 of 7.7 per cent. And intermediaries interviewed for the report said they expected to be able to focus on growing their business now the issue of the default retirement age exception for group risk benefits had been resolved.
The report says competition between providers and intermediaries in 2010 was intense with little expectation that rates would harden. But the report says the competitive nature of the market was seen as a barrier to innovation with product providers and intermediaries focusing primarily on retaining existing books.
Ron Wheatcroft, co-author of the report, says: “The results reflect the very competitive marketplace with pressure on employer costs feeding through to greater competition for intermediaries and product providers. Despite a modest reduction, the number of schemes in force held up well.
“Survey respondents frequently pointed to the important role for group risk schemes in the move away from state provision to greater self-responsibility.”
Katharine Moxham, spokesperson for Group Risk Development says: “It is most encouraging to see the results pointing to the beginning of a recovery compared with 2009. Although overall in-force group risk premiums have fallen very slightly compared with 2009, this reflects the highly competitive nature of this marketplace. In force benefits have grown across all product lines and the number of schemes in force has held up well, indicating that employers and employees still highly value these benefits.
“It is also encouraging to see survey respondents’ confidence returning, with increasing conviction that the industry has a strong role to play in the move away from state provision to greater self-responsibility.”