Demand for group risk and health and wellbeing benefits is growing among SMEs. While this is a huge opportunity for advisers, understanding the reasons behind this interest is key to ensuring an SME gets maximum value from these benefits.
Growth in sales can be seen in this year’s Swiss Re Group Watch report. It found that the number of group risk policies grew by 1.4 per cent, with SMEs driving a significant share of this growth.
“It’s great to see more SMEs taking out group risk as it debunks the myth that these are benefits only provided by large employers,” says Katharine Moxham, spokesperson for Group Risk Development (Grid). “It boils down to advisers getting the message out there more. Employers don’t know what they don’t know.”
Driving demand
While advisers have worked hard to drive take-up, market conditions have helped too.
Jo Tressler, director of employee benefits and protection at Clear Employee Benefits, says the pandemic was a trigger for sales of all types of health and protection insurance. “Concerns about the state of the NHS have increased interest in medical insurance but they’ve also made the group risk market more buoyant,” she explains.
As well as using medical insurance to shrink waiting times, the pandemic also changed attitudes and expectations around health benefits. Employers saw they needed to look after workforce health and wellbeing more, while employees increasingly expected cover.
This has resulted in an increase in take-up of all types of health benefit as Nick Homer, head of corporate risk market management at Zurich, explains: “SMEs take a slightly different approach to benefits to larger companies. While many see life insurance as the foundation benefit after the pension, we’ve seen significant interest from SMEs wanting to roll out critical illness or income protection.”
Additional influences such as the Keep Britain Working Review and changes to Statutory Sick Pay introduced under the Employment Rights Act 2025 have helped to amplify the noise around workplace health. “The focus is very much on workforce absence,” says David Williams, head of group risk at Everywhen. “It’s much more visible in a small business and employers are increasingly aware that there are products available that could help.”
Financial pressures
Absence may be more visible in an SME but so too is the cost of providing these benefits. While some can afford to roll out the full suite of group risk and healthcare benefits, most will weigh up the costs before making a choice.
Tressler says this can mean medical insurance is shelved. “Medical insurance can be expensive and, due to medical inflation, costs can become intangible,” she says. “In contrast, group risk premiums are stable, with a simple benefit such as life insurance being low cost. It can be a quick win for an SME.”
In some instances, the cost of rolling out a benefit to the full workforce can even save an SME money, as Moxham explains: “If a company is protecting its senior executives, it’s worth looking at extending cover to everyone as it can work out cheaper.”
The demographics of the workplace can also influence decisions. Rob Marshall, sales director for employee benefits at Verlingue Employee Benefits, explains: “Younger employees can quickly become disgruntled with medical insurance. They might never claim but will still be hit with a P11d tax charge every year. A lower cost group risk benefit may be more relevant.”
Added value
Group risk benefits also carry more clout these days. Rather than simply providing a financial safety net for death or serious illness, many now come with added-value benefits such as a digital GP or an employee assistance programme.
This makes them a particularly popular fit with SMEs, who are statistically much less likely to see a claim than their larger peers.
Marshall agrees: “At the SME level, employee benefits packages need to be both proactive and reactive. Something as simple as group life can look after an employee’s family financially if they die but will also cover more immediate health needs such as GP appointments or mental health support. Many will even help keep employees engaged through retail discounts. It can be a rich set of benefits.”
These add-ons have changed the way group risk is sold to SMEs. Rather than promoting a financial safety net, advisers are increasingly pushing the health and wellbeing message.
Everywhen’s Williams says he positions group risk as workforce protection rather than focusing on the insurance element. “These add-ons help with prevention, employee wellbeing and the resilience of the business. The company is looking after its staff in the same way an MOT would help it maintain a fleet of company cars,” he says.
Powerful peripherals
Although the health and wellbeing needs of employees can vary enormously, advisers single out several add-ons as particularly valuable to SMEs.
“Digital GPs, mental health counselling and digital physiotherapy can make a significant difference,” says Williams. “These can be used as early intervention tools, preventing a minor problem turning into something more troublesome, but they’ll also help employees skip NHS waiting lists.”
In some cases, add-ons will even take priority over the underlying group risk product. Tressler explains: “We’ve had a client put a low level of life insurance in place to get the other benefits. It gives them the protection if the worst does happen but also means they can take advantage of the added-value services.”
While they already pack a powerful punch in an absence management strategy, as SME interest grows, advisers would also like to see services tailored more to the needs of these smaller businesses.
“I’d like to see some really practical support added to group risk benefits,” says John Mullally, group risk and healthcare consultant at Cartwright Employee Rewards. “An SME won’t necessarily have the expertise to use these tools effectively.”
Also high on advisers’ wish lists are support for the business itself. Increased provision of legal and HR support, especially through helplines, would help to make SMEs more resilient.
Adviser support
While a group risk product can deliver an instant health and wellbeing programme to an SME, advisers stress that communications are essential. “SMEs need to sell these benefits to employees or they won’t use them,” says Mullally. “There’s a big emphasis on advisers to carry out these communications.”
But there’s a financial catch. Rolling out an all-singing, all-dancing communications programme for an SME rarely makes economic sense for an adviser. “It needs to be nice and simple,” says Homer. “Life insurance for a company with 10 employees isn’t a huge sale.”
In recognition of this, insurers are providing more support around communications. This can include enrolment webinars to explain the benefits, educational material on health and wellbeing and QR codes and signposting to improve employee engagement with the add-ons. “Support does vary,” says Tressler. “We look to get the insurer to run a webinar when they set up the benefit and then support any queries that might arise. We’ll also work with the employer, especially at renewal, to promote benefits.”
Workplace trends such as Keep Britain Working are also expected to reinforce employer responsibility for workforce health, with group risk products helping SMEs meet these expectations.