The UK group risk market showed slower growth in 2024 compared to previous years, with the number of policies increasing by 3.2 per cent to 94,675, from 91,739 in 2023. Over the same period the number of insured lives rose by 3.7 per cent to 15.7 million.
According to Swiss Re’s Group Watch 2025 report, growth was steady across major product areas. Group death benefits covered 11.4 million people, up 3.6 per cent. Critical illness cover rose by 4 per cent, reaching 840,000 people, while long-term disability income (LTDI) cover increased by 3.9 per cent. However, fewer people are insured to retirement, with only 39 per cent having full-term LTDI cover, down from nearly 60 per cent in recent years, as more employers opt for shorter benefit terms to reduce costs.
One reason for this slowdown is lower inflation, which has led to smaller salary and benefit increases. Rising costs, especially National Insurance (NI) hikes, are also a concern. NI contributions rose from 13.8 per cent to 15 per cent, and the lower threshold dropped from £10,000 to £5,000.
Speaking at a report webinar, Swiss Re technical manager Ron Wheatcroft said: “It is clear that employers will be looking for cost savings, and group risk may be one of the areas they will look at.”
Even with these pressures, extra services like virtual GP access, mental health support, and employee assistance programmes (EAPs) remain popular.
He said: “These are embedded benefits, and they are well valued. They really came to the fore after the pandemic, and people have continued to use them, which makes them difficult to take away. They fit very well with some of the government thinking about returning people to work.”
But some employers are reviewing these services, especially when using multiple insurers, as overlapping benefits can drive up costs.
Wheatcroft explained: “If benefits become optional rather than standard, there is a risk HMRC could classify them as a taxable benefit, so employers need to be cautious.”
Meanwhile, some employers are even shifting focus from group income protection to private medical insurance (PMI), which is seen as more immediate and easier to value.
Wheatcroft said: “The challenge at the moment is how you manage with a budget that is not growing. Some employers are clearly looking at where they can save. The reality is that some have cancelled group income protection in favour of private medical cover.”
Another issue is the tax burden on excepted group life policies. These are often held in trusts and can face tax charges, even though they don’t earn investment income.
He added: “We believe the legislation was originally intended for investment products, not pure life assurance. Given the imbalance between the admin cost and the actual tax collected, we think these policies should be exempt from the current tax charges.”
Swiss Re also addressed the assumption that group risk mainly supports large companies. In fact, 90 per cent of schemes cover fewer than 250 employees. While this shows the market supports SMEs, they may struggle most with rising NI costs.
The sector sees hope in the government’s focus on workplace health. The review led by Sir Charlie Mayfield could highlight the importance of group risk benefits.
