The UK group risk market enjoyed another record year of growth in 2023, according to the latest market figures from Swiss Re.
Its Group Watch report shows that the number of in-force policies increased by 4,420 to 91,796, while the number of people insured hit 15,314, 655 — a 6.2 per cent increase year on year. This equates to almost 900,000 more people being covered on these group risk policies, according to trade body Group Risk Development (Grid).
Swiss Re’s figures show the breakdown for individual products lines, with the biggest percentage increase being to group critical illness, albeit from a far smaller starting base.
Swiss Re found that the number of members insured in Group CI schemes increased by 164,817 last year, a rise of 22.4 per cent. This takes the total number of people covered to 901,387. Insured benefits under critical illness schemes increased by 14.2 per cent to a total insured figure of, £64.2bn.
For group life insurance, Swiss Re found that more than half of million more people were now covered under under lump sum death benefit schemes, an increase of 5.5 per cent. In total there were 579,083 more members covered taking the total covered to 11,083,680. Insured benefits under lump sum death benefit schemes increased by 12.9 per cent, taking total insured benefits to £1,781bn.
However, Swiss Re found that the rapid decline in dependants’ death in service pension continued, with a decrease of 41 per cent in in-force members. There are now just 1,314 policies in force covering 74,403 members.
When it comes to long-term disability income (LTDI), the number of members covered under LTDI schemes increased by 201,377 (6.6 per cent), taking the total number of people covered to 3,255,185.
Insured benefits under LTDI schemes increased by 12.5 per cent, taking total insured benefits to £124bn per annum. Swiss Re said that more than 90 per cent of all in-force LTDI policies cover fewer than 250 members, a typical benchmark for an SME.
In another year of high inflation in the UK, the average benefit per member for LTDI increased by 5.5 per cent and the average lump sum death benefit increased by 7 per cent.
However, the average in-force sum assured for critical illness fell by 6.7 per cent from £76,433 to £71,316. This Swiss Re says this was partly due to an additional additional product provider shared data where the average sum assured was lower.
Insurance veteran and joint author of the report Ron Wheatcroft says: “In the face of increasing costs for death and disability benefits, it’s extremely encouraging to see the value employers put on the provision of risk benefits to attract, retain and support their workforces.
“It was particularly pleasing to see a further 201,377 members of LTDI policies in 2023, on the basis that workplace LTDI policies not only pay a proportion of pre-disability earnings, but also bring the additional benefits to help people to remain in or return to work as and when they are able.”
But despite clear progress, Wheatcroft says more must be done to help employers. He says this means “widening the health narrative” to include the important role vocational rehabilitation plays in supporting workers and ensuring the tax system treats occupational health and vocational rehabilitation services consistently.
“This year we’ve seen calls from product providers and employee benefits consultants for the Government to reconsider the tax treatment of contributions made by members to extend LTDI benefits provided by their employer. For the second year running, the percentage of schemes offering this facility has reduced, with the double taxation of premiums and benefits a barrier to what could otherwise be greater personal resilience.”
Katharine Maxham a spokesperson for the trade body Group Risk Development (Grid) says: “It’s excellent news that in 2023, the number of people covered by the industry increased by 893,268, making group risk benefits some of the most popular employee benefits offered by companies.
“The number of employees insured under group risk policies (15.3m) now exceeds half the payrolled population which is a step-change in itself given the steady increase in employment to higher than pre-pandemic levels.
“It also demonstrates that employers increasingly see the value of what we do as an industry – not just in terms of financial protection for when the worst happens but also the extra support services we make available to employers and employees alike.
“Interestingly, the report also highlighted the topic of the language the industry uses to explain and promote group risk, with calls for this to be made clearer. It’s therefore key for communications around group risk benefits to be simplified so that people who work outside the industry can relate to the value of what they have in place, and it’s an area where the industry and employers need to work together.”