John Ritchie reviews the trends in employee benefits and looks ahead to its future growth.
This year has been one of significant and rapid change for the employee benefits industry.
Employers are striving for better value and a clear return on investment.
The acceleration of the move away from defined benefit-led arrangements has added to an unprecedented level of review of scheme structures and providers.
Employers wanting employees to see and feel the value of their entire package has stimulated growth in web platforms that deliver improved communications but at the same time reduce the costs of delivery in all parts of the value chain.
The rate of change in the way benefits are distributed has been even faster than we had expected and hoped for.
While the change may be disruptive, we're embracing it.
Concerns about growth in the group risk market are somewhat overdone.
While there are clear pressures, there are new opportunities, too.
We've seen evidence of growing numbers of large employers who were previously self-insured now looking to insure for the first time.
This is not just prompted by adviser belief that pricing levels are very low, but also by a broader trend in businesses seeking to remove mortality, morbidity and longevity risk from their balance sheets.
If the industry can communicate effectively, then economic uncertainty should only serve to increase the importance of employee benefits.
Continuing economic uncertainty means that people are taking a closer view of their personal financial risks and asking how they can safeguard against the unexpected.
For many, cover through their workplace will be a convenient and cost-effective solution.
Similarly, as many employers find that there is little headroom to increase salaries, the currency of workplace benefits in the war for talent is also increasing.
Looking ahead to the long term, the political commitment to NEST is good for the industry as it will make people far more aware of the need to get their basic death and disability cover needs arranged.
If we look at other markets where there are compulsory pensions, this has definitely been a huge stimulant to growth in these sectors.
But, it can only happen if there is investment in systems and communications that help people to assess their situation and make it easy to get covered once they have recognised the need to protect themselves and their families.
John Ritchie is CEO of group risk provider Ellipse.
