Long-term disability income premiums stood at £724m in 2017, up 6.3 per cent on the previous year, while death-in service premiums rose to £1.3bn, an increase of 4.3 per cent.
Group critical illness premiums topped the £100m mark for the first time ever, reaching £101m in 2017, an increase of 7.4 per cent.
The number of in-force EGLP policies increased by 14 per cent in 2013, while the number of EGLP members increased by 21 per cent to 782,674 people.Dependents’ death in service pension (DISP) policies and members both fell over the period.
| 2013 | 2014 | 2015 | 2016 | 2017 | |
| Registered | 76,724,906 | 7,765,281 | 7,971,060 | 8,183,943 | 8,345,874 |
| DISP | 514,132 | 494,870 | 399,121 | 375,970 | 354,578 |
| Excepted | 334,742 | 391,438 | 490,911 | 644,492 | 782,674 |
Swiss Re technical manager and report author Ron Wheatcroft has flagged concerns over potential tax charges flowing from the discretionary trusts used for EGLPs, and has called on the Government to create an exemption for group risk products using the structures.
Wheatcroft says: “More people being covered under death in service policies is very welcome. There are issues for trustees of EGLPs, however, with the discretionary trusts used to facilitate payment potentially subject to periodic, entry and exit charges. The amount of revenue generated is tiny, no more than £1m per annum. The costs of the legal advice needed at outset and administering the tax outweigh this by a factor of four or five. As the market grows, the disparity between costs and revenue raised increases.
“We are urging the Government, in its consultation on the taxation of trusts, to remove this burden from employers who are simply trying to do the right thing for their workforce by arranging simple life cover to protect their families and dependents. This could best be achieved by an exemption where the sole asset of a discretionary trust is an EGLP.
“Overall, the results are encouraging, in particular the positive long-term disability income numbers where, after many years of slow decline in policy numbers, the data show an upturn, both in policies in force and people covered. This increase was evenly spread across a range of policy sizes.
“Despite ever-increasing cost pressures on employers, more than 90 per cent of all arrangements provide cover for a period of at least five years, providing vital financial support for workers and for their families.”
| Product | 2016 | 2017 | % change, 2016/2017 |
| Long-term disability income (LTDI) | 2,289,405 | 2,403,173 | 5.0 |
| Death-in-service benefits | 9,204,405 | 9,483,126 | 3.0 |
| Critical illness cover | 586,275 | 571,848 | -2.5 |
Group Risk Development spokesperson Katharine Moxham says: “It’s been another positive year for the group risk industry, showing growth of in force benefits across all three group risk products and nearly 380,000 more people protected against financial loss via group risk insurance during 2017.
“Employers play such an important role in facilitating affordable financial protection cover through the workplace but now, increasingly, Government is looking to employers to help meet its ambitions for a healthy and inclusive workforce too. Group risk benefits can help deliver this through the inherent support services that group risk providers make available to employers, HR, line managers and employees for use on a daily basis.
“Indeed, enlightened employers of all sizes are seeing the value of group risk benefits, not only for financial resilience but also in helping to deliver on engagement, productivity, recruitment and retention.”
Ellipse CEO Lee Lovett says: “Overall this year’s report continues on the positive upward growth curve from previous years, albeit it would be great if we were talking about more material growth. The number of employees covered continues to grow across all products which is encouraging, however with much of this due to a strong employment market over the last few years as currently covered employers expand, this should not mask an otherwise disappointingly low uptake amongst new employers. The small increase in the number of new group income protection schemes, the first for many years, is encouraging and early signs of positive growth, but we must capitalise on this and growth in new group life schemes to really bring our products to employer’s who’ve never previously had cover.”
Canada Life Group Insurance marketing director Paul Avis says: “Whilst the growth in group life is astonishingly good again, there are still areas of concern, particularly the increase in excepted schemes, especially in light of the imminent government review, and the decline in DISP, which a fantastic and often misunderstood employee benefit.
“The continued growth of critical illness cover, albeit from a low base, shows that advances in online technology to deliver benefits are supporting growth in this area.”
