Aviva is the latest insurer to announce changes to cover the National Insurance Contribution (NIC) rise as part of group income protection (GIP) schemes.
Canada Life and Legal & General have already confirmed they will be increasing premiums for affected schemes when they implement the changes.
In September the government announced plans to increase health and social care funding with the rise and on 6 April 2022 NICs will increase by 1.25 percentage points.
On 6 April 2023 NICs will revert back to the current rate and a new health and social care levy of 1.25% will be introduced.
Under the changes announced by Aviva, it will include the increase to NICs and the new levy.
The change will benefit existing group income protection policies, where the policy insures NICs, and; new GIP policies going on risk from 6 April 2022, where the policy insures NICs.
The insurer said that as these changes will apply automatically when NICs are insured, employers and employee benefit consultants will not need to take any action.
Health & Protection contacted Aviva to find out if premiums will be increased to accommodate the NIC increase, when this could occur, for which schemes and by how much.
In response an Aviva spokesperson said: “Most of the Group Income Protection policies we insure use a unit rate based on total salary roll and there will be no change in premium for these policies.
“Some of the group income protection policies we insure use a unit rate based on total benefit. The premiums for these schemes will have a small increase as the increased NICs will result in a higher insured benefit. Any premium adjustments will be made at the end of the policy year.”
While Aviva would not be drawn on the premium increase for the unit rate policies as this is commercially sensitive, Health & Protection understands there will be a small premium increase for policies based on total benefit.
Commenting on the changes, Jason Ellis, sales director, group protection at Aviva, said: “By covering the increase in NICs and the levy announced by the government to pay for health and social care funding, we hope to provide reassurance and certainty to our group income protection clients who insure National Insurance Contributions, as the changes come into affect.”
Last month Legal & General responded to the changes by announcing it would accommodate April’s NI hikes in GIP policy schemes and premium calculations – meaning some schemes will see rate increases.
In December Canada Life announced it was also increasing premiums for GIP schemes that have a rate review or go on risk from 6 April to cover the rise in NI.
