The right tools for the job

In Information to demonstrate the return on investment (ROI) of group risk products is in woefully short supply, in marked contrast to what is available across the Atlantic, and needs to be addressed if the UK market is to grow, said delegates at last month’s Group Risk Adviser Forum. But it was accepted that getting robust data is difficult, and advisers pointed out that there are ways of using what statistics there are to demonstrate value to employer clients.

Moxham said: “It’s certainly not great to hear that coming from one of the authors of the report but I would love it if tax breaks went ahead. We would see new products coming out of it because group income protection providers, who are not due to benefit in this respect from the proposals, would have to be innovative and work with PMI providers and create a hybrid product. The dialogue is still going on and there will be a further consultation once the government makes its response sometime this year.”

Attendees certainly didn’t consider that trying to sell group risk in the current economic climate was a hopeless case but there was universal agreement that not surprisingly large companies are much easier to interest than smaller ones, not just because they typically have far greater resources, but also because they tend to have HR personnel who are up to speed with employee benefits.

“There is certainly education going on for larger employers but none of us have big enough budgets to embark on massive educationprogrammes if they are not within the scope of our fees”

Delegates agreed that getting buy-in from finance directors was key, and enabling HR personnel to be able to put the argument over was key. Fletcher said: “Clients generally are very much more educated than they were five or six years ago when some HR people knew nothing about compensation and benefits, and this helps to a degree.”

Hayes also pointed out that actually experiencing claims had made the bigger players more alert to the benefits of group risk products.

She said: “Most family-run SMEs with 10 lives or less have never had one of their staff off long-term sick so they therefore think they don’t need the cover. The bigger companies with thousands of employees will, on the other hand, have had 10 or 15 people off sick.”

Larger employers were also considered far more likely to have the resources necessary to fund supporting educational programmes.

Hackett said: “There is certainly education going on for larger employers but none of us have big enough budgets to embark on massive education programmes if they are not within the scope of our fees.”

Additionally Fletcher pointed out that smaller employers found it harder to see the demand for and the benefit of group risk, finding it cost-prohibitive and complex.

He said: “For larger employers it fits into all their corporate processes, which a smaller employer doesn’t necessarily have. Yes, we have conversations with small firms but it’s not always as easy as just raising the issue.

“I think private medical insurance is a bit different to group risk because there is a demand and an expectation around a certain level of the product and there is a real value to the employer as it sees something that will be used on an ad-hoc or regular basis. Company-paid PMI is arguably voluntary because employees must consider whether they want to pay for their P11D liability, and in some cases also whether they want to pay to include dependents on cover.

“You wonder whether you would get the same take-up if there was the same cost to a life assurance or income protection scheme” continued Fletcher. “How many people typically value income protection? The answer is very few but they do tend to value life cover because it seems simple and they invariably know someone who has died. It’s all about demonstrating return on investment to get employers to value the benefit.”

Return on investment is set to become increasingly important as employers demand more from their benefit spend. We may not have the perfect tools to help demonstrate this just yet, say advisers, but smarter use of what is available can bring results.