Employees suffering as a result of a lack of information
The group risk market must improve market communication, Swiss Re's Group Watch 2009 has said. While 2008 saw a modest rise in the UK group protection market, the report noted low expectations in the market.
Overall in-force premiums have risen 3.1% to £1.64bn, compared with £1.59bn at the end of 2007. Premiums for group death benefits were up 3.8% over the year at £945.2m in 2008. Group income protection (IP) cover was up 1.2% at £648.9m while in-force annual benefits increased by 4.7%.
Group critical illness cover amounted to £45.4m, up 22% on 2007. Growth in 2009 and beyond is expected to depend heavily on new business written via flexible benefits packages.
The overwhelming issue was the cost of benefit packages to employees - including concern flexible-benefit arrangements will slow as employers focus on core expenses.
Ron Wheatcroft, technical manager at Swiss Re and author of group watch, said: "Market sentiment suggests that the group risk market must get its act together during 2009 if the negative expectations for market performance are not to become a self-fulfilling prophecy.
"As more employers offer flexible packages, the protection industry must engage better with employees so that they fully understand the value of the protection available through the workplace."
Another key theme in the report is the need to promote the value of group risk better to employees, scheme members, the media, government and other policy influencers.
Graham Clark, chairman of Group Risk Development (GRiD), representing the group risk industry said: "Group IP products are increasingly integrated with employee rehabilitation and absence prevention. With small or no salary increases on offer, employers are looking at added value benefits - employers will be able to provide access to a range of benefits at cheaper rates than the employee would be able to get on the open market while containing their own costs. It is precisely these types of benefits that we, as an industry, need to communicate."
