Group protection sales may be on the up, with 900,000 new members covered on these workplace policies last year, but the new chair of the trade body, Group Risk Development (Grid) Colin Fitzgerald is not content with this progress.
Fitzgerald, who is also Legal & General’s distribution director of group protection, believes that the industry “needs to be a lot more ambitious”, and says he would like to see more significant growth in future — a fact he has already raised with Grid’s steering committee.
He says: “The growth in the market is testament to the good work that advisers are doing. But I’ve worked for a number of big providers in the industry and we’ve spent gazillions trying to put together cogent arguments as to why employers should be buying group protection, how it can benefit their employees, and why these products are basically the best thing since sliced bread.
“But collectively I think we have failed to date, when it comes to getting this message across, particularly when it comes to a product like group income protection. GIP policies offer really rich benefits today, but we’re still at around 11 per cent penetration in the market, so we are just not cutting through — and we need to address this.”
Despite this frank assessment of the relatively slow progress made to date, Fitzgerald is not gloomy about what the industry has to offer the political parties.
Health trends
Wider health trends, a political desire to reshape benefit payments, and a willingness for greater co-operation across the industry could provide the opportunity to start changing the narrative around group risk he says.
“I genuinely believe that as an industry we have much more to offer outside of these core protection policies. This isn’t just about selling more policies to more people. We’ve got to be far bigger in our ambition. This is about ensuring the product we sell improves the health and wellbeing of the working population. Group risk products have the potential to reduce pressures on the NHS and ultimately help boost economic productivity.”
As Fitzgerald points out, employee absence rates and workplace productivity levels are no longer topics solely discussed at the industry events he attends and in specialist journals. The spiralling numbers of working age adults that are now economically inactive has recently been making headlines on the main TV news bulletins and leading the front pages of tabloid newspapers.
Fitzgerald says that the group risk sector should be part of the solution to this problem — not least in the range of value-added services offered, which can help people stay in better physical and mental shape. Meanwhile, he says around 90 per cent of employees using the early intervention and rehabilitation services offered on group risk policies have been helped back to work.
Grid role
So what role can Grid play in helping raise the profile of these products and ensuring the group risk sector is part of this political debate?
Fitzgerald says he is hoping to drive change on a number of fronts. He is keen to work with a range of other industry bodies including the Association of British Insurers (ABI) and the Association of Medical Insurers and Intermediaries (AMII).
“These bodies all have their own public policy departments. Grid has its own public policy department, big insurers have their own public policy departments. We need to collaborate better. There are some hugely intelligent people doing some hugely intelligent things, but it’s not always joined up. There’s no point in us working in splendid isolation — we are not going to be able to influence policymakers this way. We need to properly discuss and outline our ideas and, crucially, ensure this is supported by good data.
“If we can bring together the various different data sets and information covering this sector it gives us a more powerful voice, and the potential to be part of the ongoing political debates, particularly around the reform of statutory sick pay.”
SSP questions
Fitzgerald says he wants Grid to become part of this political conversation. “The ABI has done a great job to talking to the government and Department of Work and Pension (DWP) last year. It highlighted some of the great work group protection does.
“But in my opinion it stopped short of digging into some of the detail of the preventative strands. And the reason I’m keen to highlight this element is the SME market. The government is absolutely focused on SMEs, so we have to shift our argument to make sure we’re talking about the topics the government wants more information on.”
He says there’s a danger that when talking about employee benefits that assumptions are made in the corridors of power that these relate to the kind of healthcare benefits typically enjoyed by those at management level or above. But he points out this is clearly not the case, with more than 90 per cent of those covered under group risk schemes working for firms that employ less than 250 people.
Fitzgerald says it is important to talk to regulators, policymakers and politicians from all sides of the political spectrum, particularly with an election looming. But this presents its own challenges: “In an election year nobody wants to say anything that’s going to cost the consumer money,” he says.
“At the moment though the Labour Party is considering what being in power might mean in terms of challenge, and then you’ve got the Tories struggling to think about what they will do, if by some miracle they do stay in power.”
Fresh thinking
He thinks a new administration may be more receptive to looking at new ways of tackling the high number of people who are economically inactive.
Fitzgerald says his priority is becoming part of this conversation. This needs to happen before bodies like Grid start making demands on what changes they’d like to see.
So what are his key policy asks when talking to politicians? “It would be great if we could revisit the idea of auto enrolment for income protection, but right now this is not a popular thing to say out loud.”
As he points out, the government has dragged its feet when it comes to increasing AE pension contributions. Policymakers are unlikely to support putting an additional burden on employers at present to pay for better protection coverage — although he says the costs would be modest. “The average premium for a GIP scheme is around £355 a year per life. So it might be a 1 per cent extra payment or below.
“But we also need to be looking at incentives, whether it’s some form of tax-incentive around statutory sick pay, or a government incentive to encourage support for insurance for partly-insured options.
“Compulsion could work, but we are a long way from that and in the current environment insisting on compulsion could go down badly.”
Fitzgerald says it is also important to look inwards, at what can be done to improve things within the industry.
Better member engagement is a key priority. “We know that education, communication and employee engagement are absolutely crucial to growing the footprint of the benefits that we already offer. We’ve got 15.3 million members of schemes. But if we are really honest with ourselves, are these members all benefiting from the full range of services on offer? The answer has got to be no. The status quo isn’t good enough and we need to improve this, particularly with the new Consumer Duty and Value for Money regulation.”
He says providers can be “hampered by marketing privileges” designed to stop companies ‘selling’ to people when they are simply trying to promote services to scheme members. Fitzgerald wants to tackle this. “This isn’t selling is it? Intermediaries have made a recommendation and the insurer is now providing these services, but they need to let people know about them. I want to create a Grid standard that addresses this, and looks at what is an acceptable benchmark for communication to employees.”
App proliferation
When it comes to these services, is there a danger that the proliferation of services — be it EAPs, virtual GPs, mental health apps, discounts schemes and so on — is confusing for both employer and employee, particularly given many are duplicated on different group risk products.
“I think it’s a two-speed market. As we have said many of these policies are aimed at the SMEs who often don’t have rich benefits. They might have one product, but are not necessarily utilising the added benefits available. We’d like them to use them more.
“Alongside this are large corporates where we are seeing complexity in the benefit design. This is where the consultancy advice from intermediaries can help. At the moment there are product overlaps, but it’s about delivering clarity to the customer.”
He adds: “We’re hearing that there’s a trend for corporates to favour the virtual GP services offered on group risk products rather than PMI policies, as this is less likely to mean a referral straight into the PMI scheme, potentially affecting the claims fund.”
Questions have also been raised about the service standards on some of these value-added benefits, with increased demand for virtual GPs and mental health counselling in particular creating access difficulties.
Fitzgerald says this may have been a recent problem with some providers. But he points out the tendering process is robust. Services standards will be a key issue for insurers working with third-party providers. Better engagement with these products will lead to greater demand for these services, but he is confident the industry will be able to meet this ongoing demand.
Another concern is premium increases, particularly in the aftermath of Covid and the ongoing problems in the NHS. But Fitzgerald says there isn’t evidence to date that group risk claims are rising significantly, or that premiums will rise.
Claim trends
“There has been an uptick in life insurance claims, but in terms of premium increase it is not significant. And this remains a very competitive market, so these pressures will likely to keep a lid on significant increases — there is always a carrier out there looking to win business by competing on rate.
“It’s fair to say we’re seeing some more GCI claims, but this remains a relatively small part of the market. There were concerns that long Covid may be a big problem in the GIP market, but this seems to be abating. For now we are keeping a watching brief on future price rises, but it is not an imminent concern.”
One unexpected pressure though is the far more significant premium increases in the group PMI market. Fitzgerald says: “There are some really big increases going on over there, and if you’ve an adviser reviewing benefits for a large client, then we’ve seen some are trying to squeeze down the cost of group risk to be able to continue offering PMI benefits.”
Fitzgerald says as the new head of Grid he is keen to ensure it continues to deliver value for members. Grid is a good example of industry co-operation he says, covering providers, consultants and advisers. It has also attracted a wider membership from companies offering the full range of wellbeing support services.
“I want to ensure we continue to have a good mix of providers and intermediaries on all of our bodies, especially the steering committee.”
He says Grid has improved training options for members, and well as recently revamping its website to better support members. “It’s really looking at the things we can offer to help our members. We’ve run training sessions on a whole host of areas, from vocational rehabilitation to multinational pooling to routine product-based topics
“This is complemented by extensive research, designed to help members. We want Grid to remain an agile and active forum, promoting best practice and giving those in the industry the opportunity to learn from each other.”