Record-breaking year for group risk

A record-breaking year for group risk saw the number of lives covered grow by 300 000 in 2013, according to Swiss Re’s Group Watch 2014 report.

The UK group risk market grew by 2.8 per cent overall, with nearly 11 million people covered in some way at the end of 2013.

The report identified strong premium growth across all lines, led by a 9 per cent increase in in-force death benefits and a 12.8 per cent increase in critical illness premiums.

For the first time, over 2 million people in the UK are insured in long term disability income schemes offered by their employers

The report estimated 100 000 more people are covered by workplace arrangements as auto-enrolment is implemented in large companies.

Most market participants surveyed for the report predicted growth will continue in 2014 as overall economic conditions improve and auto-enrolment is implemented by small and medium sized companies. 
Excepted group life premiums grew by 17.4 per cent.

Swiss Re group risk table
Swiss Re group risk table

The report says the trend away from death in service pensions (DISP) towards lump sum benefits is continuing and is likely to accelerate when compulsory annuitisation is removed in April 2015.

The report identified Canada Life Group Insurance as having the greatest market share by employer numbers, employees covered and annual premiums.

Swiss Re UK & Ireland chief executive Russell Higginbotham says: “It’s great news that the numbers are up for a second year. Auto-enrolment has driven growth and when fully implemented, millions of UK workers will have a pension – which is a great accomplishment. But there is still work to do. Even with auto-enrolment, only around half of the UK will have life cover and about 10 per cent will have disability protection. We need to improve on that and employers are a trusted way to deliver financial protection.” 

 Group Risk Development spokesperson Katharine Moxham says: “It’s great to see that the group risk industry has continued to build on last year’s positive growth and remains resilient. There is also confidence that improving economic conditions are likely to bring more growth during 2014 and beyond. Overall in-force group risk premiums are up 8 per cent on 2012, sums insured have increased across all three products and, as was the case for 2012, 300,000 more people are protected through group risk arrangements against financial devastation from loss of income through illness, injury, death or disability.”

Canada Life Group Insurance managing director Ian McMullan says: “We have previously been number one in terms of employer and employee numbers but I am delighted to see that we have now reached number one for annual premiums too.”

Friends Life director of group protection David Williams says:  “The challenge for the market now is increasing the number of new schemes, especially for income protection where the benefits and added value services now offered are more attractive than ever. As the Group Watch results show, employers don’t have to fund all the benefits as there is a continued growth in flex and voluntary group protection benefits for all products, allowing employees to choose the benefits that best suit their personal needs, lifestyle and budget.”