While employers see the value of group income protection (GIP) as a means of early intervention to keep employees at work and and demand for this benefit is holding up, economic pressures on UK plc is mounting, not least due to an increase in employers’ national insurance.
While changes to Statutory Sick Pay (SSP) this year have cast a spotlight on the need for pay out for workers should they fall out of work due to illness, advisers maintain employers should view group income protection as an extension to sick pay.
And this all means that the role of the adviser in making the case for this benefit is more important than ever.
Mayfield Review
“We welcome the initial discovery report of the ongoing government-commissioned review by Sir Charlie Mayfield, which is looking into the role of UK employers in promoting healthy and inclusive workplaces,” Vanessa Sallows, claims and governance director, group protection at Legal & General, tells Health & Protection.
Sallows adds that crucially, the review which designed to help inform the wider Keep Britain Working proposals, acknowledges the “vital” importance of prevention, early intervention and rehabilitation in the workplace.
“And it is also the fact that it recognises work/organisational culture has a major influence on wellbeing, so supporting people back to work – in a sustainable way – should be considered part of the recovery journey,” she continues.
“In turn, happy and healthy employees add value to businesses in terms of increasing motivation, engagement and, hence, performance.”
But government has a clear role to play ahead of the final findings from the review, according to Chris Morgan, head of product and proposition strategy, protection, at Canada Life.
“While we await the Mayfield Review findings, it’s clear the government intends to encourage employers to play a more active role in employee absenteeism, so people can get back to work in a timely way following illness or disability,” Morgan says.
But the Mayfield Review is just one of a number of consultations and reviews in play as Mark Simmonds, director health and benefits at WTW, points out.
“They are seeking views from the insurance community, reviewing current practice in the UK and looking at what other countries do,” Simmonds says.
“The aim is to increase employment, keep people in work and help people back into work when they have been long-term sick, helps all of society,” he continues.
“GIP is an insurance contract that has a proven track record of helping employees while in work and those that have long-term sickness, and we will be sharing our experiences of GIP with the government through the various consultations and reviews mentioned.
“What’s interesting is there is a ready-made solution for an employer through group income protection, and we are optimistic that government policy will naturally encourage more employers to consider GIP as a health and wellbeing intervention tool.”
Statutory Sick Pay changes
The view from the sector is that this benefit should work alongside government interventions on sick pay.
“The new protections afforded by the Employment Rights Bill – including the Statutory Sick Pay (SSP) changes introduced in April 2025; namely day one access, plus eligibility extended to lower paid workers – will undoubtedly help bring peace of mind to more people,” Sallows says.
“The onus is on businesses too, to ensure peace of mind for their employees, whether that’s supplementing any shortfalls around SSP, or picking up where the 28-week SSP term ends.”
Extension of sick pay
For Stuart Lowe, director of risk and protection at Broadway Insurance Partners, GIP should be an extension of a company’s sick pay policy.
“With sick pay and reducing absence being highlighted more, hopefully more senior leaders and HR departments, and other employees will ask the question, what happens next after the sick pay runs out? How can we protect ourselves as a business?” Lowe tells Health & Protection.
“If the government set a minimum sick pay structure – such as companies paying for a minimum of three months’ salary instead of SSP – that could ensure certain standards are met. But it would also highlight the importance of sick pay and additional cover to protect the employer and employee.
“This could go hand-in-hand with incentivising companies who have GIP coverage. This could be via tax incentives, subsidies or offset the NI (national insurance) costs.”
National insurance hike
And April’s increase to employer national insurance is affecting UK plc, David Williams, head of group risk at Towergate Employee Benefits, says.
“Increasing NICs and inflation pressures will create budget challenges for employees,” Williams says.
“Existing policies may be restructured to provide lesser (cheaper) benefits and new-to-market cover may face more challenges and the industry will need to work harder to demonstrate value.”
Mitigating cost pressures
Amid this increase in costs, Lowe points to a significant trend of cutting term benefit periods.
“The biggest trend is term benefit periods, with other employer costs increasing, offering a term benefit basis allows for the employee benefit to continue with the peace of mind that your premiums can be significantly reduced,” Lowe says.
“This is also an incentive for the insurer as they are minimising the policy risk.
“Due to cost increases, its difficult for employers to choose between keeping the lights on, bums on seats or retaining the employee benefits.
“At least with the terms benefit periods, it gives employers the choice.”
Role of trade bodies
Adrian Matthews, UK deputy CEO of MetLife UK, maintains trade bodies also have a role to play.
“It’s important that insurers work with industry bodies, such as the ABI and Grid, central government and employers, to continue the education of the way in which group protection provides valuable benefits across all sectors of industry,” Matthews says.
“In addition, insurers, the protection industry, and advisers all have a role to play in ensuring HR directors fully understand the benefits on offer by purchasing a group protection policy.”
Not throwing the baby out with the bathwater
And given these cost pressures, Katharine Moxham, spokesperson for group risk industry body, Grid, says it is important employers do not throw the baby out with the bathwater.
“There’s no doubt that employers will be looking at budgets, given recent increases in national insurance contributions and increasing PMI premiums – but it’s important for them not to throw the baby out with the bathwater,” Moxham says.
“GIP and its embedded services can play an important role in preventing ill health and supporting wellbeing so it makes sense for employers to utilise it within a health and wellbeing programme, where it can help to reduce certain healthcare costs and claims.
“GIP provides excellent value and enables employers to do more with less,” she continues.
“Advisers will work with employers to deliver this and thus potentially reduce costs in other areas.”
Up to advisers
It is also up to advisers to promote this important benefit, Simmonds says.
“As advisers within the industry, our role has not changed in terms of promoting the benefits of GIP,” he continues.
“This is a product which provides a huge range of added value services promoting health and wellbeing, potentially therapies and treatments to help people stay or return to the workplace, and the ultimate safety net of an income should the person not be able to work.
“We need to continually work in making the product simpler and easier to understand, for example, the complexities around taxation of the benefit, particularly when employees contribute towards it in a flexible benefit programme, and the government may be able to help with this.”
Pivotal role
And it is not as if employers cannot see the value in the benefit.
Tony Ford, director at Santé Life, points out the firm has observed an increase in demand for group income protection solutions over the past year.
“Employers are increasingly focused on providing financial security for their workforce, recognising the pivotal role these benefits play in employee wellbeing, engagement and retention,” Ford says.
And it is also proving a potent benefit in skills-short sectors, says, Steve Ellis, joint managing director ‑ corporate services at Prosperis.
“We are seeing interest increase, particularly in areas where a skills shortage exists,” Ellis says.
“Generally, the smaller SMEs see this as a useful benefit where directors themselves take the benefit to protect their business.”
Robust demand
And looking ahead, Jason Ellis, distribution director at Aviva Group Protection, anticipates the demand for GIP is poised to remain robust, driven by a growing focus on employee wellbeing and a demand for employee resilience in uncertain economic times.
“The industry’s shift towards a consultative approach will be key in helping employers appreciate the value of these benefits and ensuring they are effectively integrated to support positive outcomes for employees,” Ellis says.
“The ongoing economic uncertainty and pressures on public health services have heightened employers’ awareness of the need to protect their workforce’s financial, physical, and mental wellbeing.
“This awareness has driven growth in the group income protection market, as employers recognise the value of offering such benefits to their employees.”
