Market review

Positive signs for the UK group risk market

Swiss Re's Group Watch 2017 report showed positive signs for the UK group risk market in 2016, with the number of new members covered by group risk policies increasing by almost 520 000 more people.

This was an increase of 4.5% on the previous year, and takes the number of people covered by group schemes to over 12 million.

Swiss Re Group Watch 2017 results summary

Overall results

520 000 more people became members of group risk policies, an increase of 4.5%. The number of people covered overall is now more than 12 million. 

Death benefits

In-force death benefit sums assured increased by 4.4%. Within this, Excepted Group Life (non-pension) benefits continued to see annual growth by almost 30%. People are finding alternative ways to arrange life cover as the reduction in the pension Lifetime Allowance to £1m makes provision through Registered Pension Schemes more complex, causing this figure to increase. In-force death in service pension benefits fell again, by 6.8%, as employers continue to withdraw cover or switch to providing lump sum cover only. 

Swiss Re said the market mood for future group death benefits business remains positive with 24 out of 34 respondents expecting the number of in-force policies to increase in 2017, with just one respondent expecting the number to reduce.

Critical illness

Critical illness policies continue to do well with in-force sums assured up 9% and premiums by 11.5%. 

While the number of people covered by critical illness policies  overall grew by 7.3%, there was a 12.1% increase in people covered by voluntary and “flex” arrangements. 

The number of people covered in employer-paid arrangements grew by just 1.6%.

The market mood for future growth is consistent with that for death benefits.

More than two-thirds expect the number of in-force policies to increase in 2017 and 25% think that there will be no change. Just two respondents think the number will reduce.

Long-Term Disability Income

For the first time in more than ten years, there has been an increase to the number of insured policies (from 17 111 to 17 168). Total insured benefits increased by more than 9% and the number of people insured by over 130 000 (over 6%).

Ron Wheatcroft, technical manager at Swiss Re and author of the report, commented: “The stand-out figures in the data show the increase in Excepted Group Life cover and there are other good signals too, including a reverse in the decline of long-term disability income in-force policies.”

In a recent article for Life Insurance International, Wheatcroft said the UK insurance market has worked hard to grow awareness of income protection insurance, notably with an industry campaign, branded as 7Families.

Yet, as Wheatcroft acknowledged: “Much remains to be done. Although new individual policy sales have increased, they are nowhere near what they could be with just over 100,000 people (below 0.4% of the workforce) purchasing cover each year.

"How can we change this? Lack of awareness and a misplaced belief in State provision are issues and one very credible idea is that the Government should compel employers to tell all their workforce what their sickness benefits from their employer and the State are (or aren’t).

"Presented well, this could be a much more compelling and direct message than broader generic campaigns which people may not relate to.”

2016 at a glance

At the end of 2016, group risk arrangements insured 12m people, a year-on-year increase of 4.5%

In force premiums totalled £2.1bn, a year-on-year increase of 3.8%

Death Benefits:  The number of people insured increased by 3.9%

Registered group life sum benefits increased by 3.3% and premiums by 1.3%

Long term disability income: The number of people insured increased 6.3% year-on-year

In-force benefit amounts grew by 9.1% and premiums by 5.3% year-on-year

Critical illness cover:  The number of people insured grew by 7.3% year-on-year 

Source: Swiss Re Group Watch 2017 report