Paul Avis, Sales and Marketing Director at Canada Life Group Insurance, makes his predictions for the Group risk market for 2012.
Intermediaries
“2012 is likely to be a decisive year for intermediaries, as they prepare for the Retail Distribution Review at the start of 2013. We are still not completely sure of the impact it will have, but a possible drop in customers seeking financial advice teamed with the need to undertake further training and qualifications might force some advisers out of the market. However, the group protection market’s exemption from RDR means that this is likely to be a growth area for generalist advisers who wish to maintain their current level of revenue. Smaller advisers, who might experience particular difficulties, could well consider this sector as a way of converting personal or high net worth clients into corporate clients to enable them to gain pension fee income too.
NEST
“NEST is likely to bring a range of opportunities and threats for the Group risk sector. Some employers will have to find extra revenue in 2012 – in some cases amounting to millions of pounds. In sectors which are already struggling, it is difficult to see how these will be funded without expense reduction in other areas and so price sensitivity in the large segment of group risk could increase whilst smaller employers, whilst deferred to 2014/16, may become adverse to spending on any new benefits in anticipation of NEST cost requirements.
“On the other hand, there are consulting opportunities to look at group risk benefits and ensure they fit in with new arrangements and possibly new business as employers engage with employee benefits for the first time. As employers review the benefits they have in place advisers might do well to raise the question of group risk products to support current arrangements too e.g. protecting pension scheme contributions under group income protection (GIP).
LEGISLATION
“The Government’s new Universal Credit will focus the public mind on how State Benefits work and an increasingly hard qualification for State Disability Benefits may drive some Group Income Protection (GIP) market growth as people see headlines about the stringent assessment and small amounts payable. The Sickness Absence Review may lead to changes to areas such as fit notes, statutory sick pay and a review of employment law.
“This in turn is likely to concentrate employers’ minds upon their health-orientated activity, in order to make sure that they are compliant with requirements such as the Equality Act. One of the overriding issues here is that while the Government is seeking to make these radical reforms, they may not actually go ahead – therefore creating an uncertain landscape for advisers, employers and providers to navigate.
Canada Life review of 2011 as we enter 2012:
“Planning for growth in 2012, in 2011 we have doubled our field sales team and introduced sales support to provide the maximum time and value we can to help our advisers build their bottom lines. We have also restructured our Business Development Unit to focus on the opportunities provided by the Class platform and its market-leading terms and conditions and also refocused our marketing team to deliver an innovative, adviser segmented communications programme. In addition in 2011 we have won awards at five out of the six events that are available to group risk providers and have achieved all of the indices on which we are measured. In 2012 we plan to build on our 2011 success and investment with even more passion for the group risk market and with an even greater level of dedicated support for our adviser clients.”
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