The 2021 report reveals that the number of in-force group risk policies increased by 3.6% last year and that the number of people covered overall grew by over 150,000 (1.1%) to 13,317,249 by the end of 2020. This compares closely with the 1.3% growth recorded in 2019, despite the advent and ongoing impact of the global pandemic.
2020 growth breaks down as follows:
• Death benefits: the number of in-force death benefit policies increased by 4.1% and insured death benefits increased by 3.4%
• Long-term disability income (LTDI): the number of in-force LTDI policies increased by 0.9% and LTDI benefits per annum increased by 6.4% to over £100billion
• Critical illness cover (CI): the number of in-force CI policies increased by 7.5% and in-force sums assured increased by 5.3%
Commenting on the data, Ron Wheatcroft, Technical Manager, L&H UKI, at Swiss Re and one of the joint-authors of Group Watch 2021, said: “In a challenging year for the global economy and for every individual touched by this pandemic, the group risk market proved remarkably resilient. Faced at first with widespread uncertainty and forced to adapt to a very different business environment, it responded with agility and was able to support even more employers, trustees and members than it did beforehand. To have achieved such growth in the context is no small feat.”
According to the report, the average membership per LDTI policy in 2020 was 155, up from 146 in 2019, which is the largest annual increase of the last five years. What is more, over 90% of those in force cover SMEs (250 members or fewer), a positive indication of the breadth and variety of businesses supported.
Group Watch 2021 is based not only on extensive market data, but also on the opinions of market experts, including 18 product providers and 20 employee benefits consultants. Several noted a significant increase in discussion and reported usage of Employee Assistance Programmes and online GP services, as employees adjusted to their increasingly digitalised daily lives.
Wheatcroft added: “What makes this year’s findings particularly notable is not only the positive growth in membership but our respondents’ praise for the way in which the market was able to adapt and execute its policies. Whether it be paying claims promptly, relaxing requirements for original paperwork or arranging deferrals to account for the financial impact of the pandemic, respondents were quick to highlight how accommodating providers have been.
“Whilst initial complications were to be expected as the world adjusted to a new normal, providers were ultimately able to demonstrate unprecedented flexibility, as well as delivering relevant guidance on mental health, diet, exercise and other central lifestyle factors for improved wellbeing.”
In order to support continued growth in a post-pandemic environment, Swiss Re believes there is an urgent need for the Government to encourage employers to provide for their workforces, and it is calling for the removal of tax complexity around products that it believes can act as a disincentive for would-be buyers of group risk products.
The Group Watch 2021 report points in particular to the freezing of the Lifetime Allowance announced at the Spring Budget and its potential burden on employee death benefits.
Wheatcroft commented: “The freezing of the Lifetime Allowance up till 2026 has only exacerbated our existing concerns about the application of the Relevant Property Trust rules to Excepted Group Life policies and will leave more employers whose death benefits are in Registered Group Life policies needing to consider what action to take.
“A simple insurance proposition in theory, death benefit provision has become an increasingly complex and expensive administrative hassle in practice. Given that life assurance provision is entirely voluntary, employers may conclude that the extra work simply isn’t worth the effort. Inadvertently, the consequences will be to leave employees and their families less resilient.
“The Government should work to encourage rather than obstruct the simple measures that make people more resilient, especially in cases where the tax collected is practically negligible and disproportionate to the costs of administration.”
