Group risk update

Group Risk Update

The Group Risk market (encompassing group life assurance, group income protection and group critical illness) is ever changing, so we asked our resident expert Dan Lamb for the lowdown on current trends and issues. Here’s a summary of his key points.

A hardening market
Group risk claims went up across the board in 2016, with close to £1.5 billion in pay-outs, up £100 million on 2015. The biggest increase was in group life assurance, with claims up by £67 million1. Group critical illness and group income protection also saw significant increases in claims. This is due in part to an ageing workforce but despite this, competition amongst insurers remains fierce.

Consolidation of providers
The market is pretty stable with providers continuing to consolidate where they can see synergies, to provide a competitive edge or to offer a new string to their bow.  Increasingly, insurers are becoming more and more sophisticated about the schemes they’ll insure with a polarisation of good and bad risks or a focus in a particular area.  We expect this to continue throughout 2017.

Rehabilitation services becoming more key
Insurers and employers are increasingly concerned with the effectiveness of early intervention and rehabilitation services. More insurers are publishing these early intervention statistics alongside their claims statistics to demonstrate their value. Early support can make the difference between staying in work and dealing with the issue or a prolonged absence.  Employer’s continue to struggle with these concepts in a predominantly price driven market but the tide is slowly turning.

Employee Assistance Programmes (EAPs)
EAPs are becoming increasingly popular as they’re cost effective and have almost universal appeal and can often form part of another group insurance product.  EAPs fit well with the continuing trend towards rehabilitation and early intervention because they generally offer useful services such as counselling (around personal problems, family issues, debt, work-related stress among others) which can help to keep employees in work or return from illness more quickly.

Private Medical Insurance
Group PMI premiums continue to rise in general, partly because of increasing claims costs, but also as a result of the increase in Insurance Premium Tax to 10% in October 2016. Employers continue to suffer the same merry-go-round of renewal driven price reviews and thankfully there remain sufficient providers to keep this competitive.  PMI remains a key employee benefit, especially amongst more senior employees and continues to be high on the agenda when considering recruitment and retention.

And finally…
You should review your group risk and health products on a regular basis to make sure that they remain relevant, sustainable and competitive. It is also worth considering the design of your benefits on a regular basis to ensure they’re delivering for both the business and your employees.

1£1.5bn paid in group risk claims in 2016, Katie Scott, Employee Benefits, 9 May 2017

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