There are various reasons why it has failed to be more popular with employers, but a key aspect is a lack of employee awareness of its value. Low employee awareness leading to low employer take up seems logical – if the average employee is not aware of the need for a specific protection and therefore does not demand such a benefit, why should their employer be motivated to provide it?
The low profile of GIP appears very different from the situation with private medical insurance. The PMI industry has over time built up a high profile and appears to be very aware of the need to pull demand through from the individual employee level. As a result PMI remains high on employees’ benefit wish lists.
Unlike GIP insurers, PMI insurers’ name and branding are clearly linked with a PMI product. Almost everyone has heard of Bupa and know it offers private medical insurance. But outside our industry only a small minority have heard of the biggest GIP insurer, Unum, or are even aware of the concept of income protection insurance.
The whole marketing and public relations process from PMI insurers seems bigger and slicker. For PMI, the alternative is the NHS and it appears that the PMI industry thrives on problems and issues within the NHS that reach the media. Without GIP there isn’t any universal alternative financial protection for the employee. Employees are often unaware of the limited extent of State incapacity benefits, or that their employer does not have a duty to provide for them beyond the short term. They also don’t know that they are more likely to be long-term incapacitated during their working life than they are likely to die before age 65.
In contrast to the GIP market, PMI organisations take every opportunity to communicate directly with end users. For instance, the PMI claims process ensures employees are aware of the value they have received and who has insured them. Though most people are never likely to make an income protection claim, GIP insurers could seek opportunities to make their presence known and reinforce the value they provide.
The GIP industry has used the intermediary communication channel almost exclusively. Intermediaries will not be able to effectively pass on the GIP message to employees directly if the employer is not interested. Intermediaries should not fear GIP insurers marketing directly to employers and employees – for those intermediaries that add value, their job could be easier.
Significant parts of the intermediary distribution channel for GIP may also not be very motivated to increase sales of GIP as a whole. What are the reasons for this? Well, unlike GIP, PMI offers higher commission on new business than for renewals. For commission-based intermediaries the rewards for introducing new GIP arrangements may not add up, compared with the higher rewards from taking over existing established GIP arrangements.
A further complication for getting the message across is the product name. Many employees may think “income protection” is an unemployment-type benefit rather than a long-term disability benefit. There is no such confusion with “private medical insurance”.
It is for these reasons that GRiD, the group risk industry body, is making its first tentative steps to starting an industry-wide sponsored programme aimed at raising awareness of group insurance benefits, including GIP, with the public. Plans are still in their infancy, but if GRiD is able to make a concerted effort to communicate the merits of GIP beyond the normal insurance industry media, then it should start to build awareness.
At the same time within the individual protection market, an “IP taskforce” aims to increase awareness with IFAs. Whilst the PMI industry has its own problems, the GIP world could learn a lot from PMI’s strong focus on marketing communication. Without getting the message across to potential end users, GIP product innovation on its own is unlikely to improve the product’s popularity and therefore take-up amongst employers of this potentially valuable product.