The group risk market undoubtedly faces some challenges as the benefits package often comes under the spotlight during a period of economic downturn, rising employer costs and increasing employer obligations as a result of new legislation and discrimination law. Therefore, not surprisingly three-quarters of advisers at the Group Risk Adviser Forum (GRAF), which Norwich Union has been pleased to support, highlight cost as the main reason why employers dont currently buy group income protection. However the group risk market is also presented with tremendous opportunities going forward in light of a declining welfare state, increasing employment law obligations and changing employer attitude towards the benefits package and the role it can play in delivering broader business benefits. An increased emphasis on the role products like group income protection can play in helping employers manage workplace issues presents providers with new opportunities regarding product design (some advisers felt that product design was a key barrier to sales) that could also potentially address some of the cost issues.
Propositions that can demonstrate shorter term value to the business, have a greater emphasis on rehabilitation and align more with broader wellness / health management initiatives could play an important part in shaping the future of the group risk market.
The government clearly recognises the critical role employers have to play in managing the health and wellbeing of the working population. Employers undoubtedly face increasing obligations regarding their duty of care towards employees and the government, in particular, is very focused on the need for occupational health services. However, many believe that the government should introduce new initiatives that encourage employers to put in place private provision to help them protect and support the wellbeing of their employees. Tax breaks for products that promote productivity is the initiative the majority of GRAF advisers want to see from the Government to promote group risk products in the workplace.
With an ever increasing focus on the need for early engagement, management and rehabilitation of incapacitated employees, group income protection, in particular, is regarded by many advisers as a product that can help employers fulfil some of their broader business requirements. Having a group income protection scheme in place can potentially support activities such as health and safety, absence prevention and the wider wellness agenda. However, half of the advisers at the GRAF event believe that the benefits or services which support absence management are most highly valued by clients.
Whilst proposition innovation clearly has an important role to pay in the growth of the group risk market, lack of general awareness of the need for protection products and the role they can play remains a major barrier to growth, with 38 per cent of advisers believing that the biggest reason for the lack of market growth is the lack of understanding by employers of the value of products.
As well as developing the benefits and services provided by group risk products the introduction of greater flexibility enables them to be offered within an employers broader flexible benefits package. Flexible benefits packages are becoming increasingly popular because they both enable employees to tailor the benefits to meet their specific needs and allow employers to better manage the benefits spend without having to compromise the range of benefits on offer. Although some believe that as the overall packages become more sophisticated the role group risk benefits play could be compromised, its encouraging to see that 50 per cent of advisers still expect the group risk share of the flex pot to increase.
Finally, with the likelihood of new group risk benefits and services being developed comes an opportunity to extend the market distribution beyond its current reach. Consequently, its very encouraging to note that half of the advisers at the GRAF event believe that the greatest potential to generate new business, if providers were to develop new products, is simply the cross-selling of products to existing clients with pensions or healthcare arrangements. This suggests there is real opportunity for rapid growth.