Out with the old, in with the new

At the beginning of the year, attendees of the Group Risk Advisers Forum (GRAF) expressed their concerns that the change in the economic climate was making employers consider cutting back on group risk benefits. As finances became tight, employers were increasingly focusing on the here and now and losing sight of the importance of protecting employees for the long-term. Many clients were asking about their contractual liabilities and as the number of people in employment fell the general view was that there could be an erosion of both group risk benefits and annual premium income.

Shortly after the GRAF, Swiss Re’s 2009 Group Watch report confirmed the fears by noting that despite group risk in-force premiums rising over the previous year, there were low expectations for future market performance. The industry had a choice; do nothing and risk the situation becoming a self-fulfilling prophecy, or find solutions to address the situation. When faced with a fight or flight decision the group risk providers fought back.

The fear that the industry could go into free-fall as employers stripped back on the products they considered – rightly or wrongly, to be “less essential” has led to a renewed passion in the industry. We’ve seen group income protection maximum benefit limits increase to as much as £350,000 and employer pension fund contributions from £50,000, to £75,000, as well as new product development, ervice improving and premiums dropping (although some would argue the latter is unsustainable).

To help employers control both claims and absence costs, group risk is increasingly being complemented with products such as private medical insurance and occupational health services – most notably, absence management tools, cognitive behavioural therapy, EAPs and health screening. Moreover, the most forward-thinking providers are now offering a whole host of added-value benefits, giving employees tangible
services they can use every day.

Aviva for example, offers its group risk customers stress management services, a 24 hour GP helpline, a bereavement counselling helpline, discounts off gym membership and travel and motor insurance and an online health management portal.

We’ve also seen significant improvements in relation to underwriting with the introduction of initiatives designed to help improve the customer experience by reducing time and cost, whilst maintaining sound underwriting principles. In addition to free cover limits being raised, we’ve seen the introduction of innovative approaches such as Aviva’s “once only” underwriting and most recently teleinterview
underwriting where customers are led through the comprehensive health and lifestyle questionnaire by a dedicated tele-interviewer rather than having to complete a traditional paper-based medical declaration.

Whilst this initiative is new to the group risk market with Aviva being one of the only insurers to offer it, tele-interviewing has already proven to be successful in the individual IP market. The dedicated teleinterviewer’s ability to ask the right questions and interpret and record the medical and lifestyle details helps insurers to capture as much information as possible in the initial interview, reducing the need for additional medical information. This has proven to significantly reduce non-disclosure, giving customers greater reassurance that their potential claim will run smoothly.

With products constantly evolving to meet changing customer needs, highly competitive premiums and increased choice, now is an ideal time to buy group risk products. However, if employers don’t understand the need for, and benefits of having group risk it’s unlikely that the products will be front of mind when employee benefit budgets are being allocated. That’s why we as an industry need to work together through
organisations such as GRiD to help educate and inform consumers.

Contrary to some, I strongly believe that the current pace of change, passion and commitment coupled with an increased appetite to raise awareness of our fantastic products will open new opportunities and that 2010 is set to be a very exciting year for the group risk industry.

Andrew Stephenson
Group Risk National Sales Manager, Aviva UK Health