The combined impact of the pandemic and an intensifying war for talent has meant demand for group risk benefits from employers has never been so high.
While advisers do not think mandatory group risk auto-enrolment schemes are likely to see the light of day anytime soon, they would like the government to talk openly about the importance of group risk benefits.
But even as the country faces uncertain times with a new prime minister facing an economy possibly tipping into recession this autumn, insurers are reporting increased demand from employers to review benefits offerings and advisers remain confident that demand for these offerings will continue unabated come what may.
“We believe that Covid-19 has been a catalyst for employers to introduce or extend employee benefits such as group protection, maximising wellbeing and benefits for staff, alongside the evolution of the workplace,” Jason Ellis, sales director for group protection at Aviva, tells Health & Protection.
“Whether staff are working from an office, remotely, or via hybrid working, it is crucial that they can access group protection tools and stay connected through their employers and line managers,” he adds.
Recruitment market ‘going nuts’
But another key contributory factor to increased demand for group risk lies with the UK recruitment market.
Almost 9 in 10 (86%) of employees said they would be more likely to work for an organisation that was open about its commitment to supporting the mental health and wellbeing of its employees, according to Legal & General Group Protection’s latest Wellbeing at Work Barometer.
And according to Clare Dare, head of health, risk and technology at PIB Employee Benefits, the recruitment market has “gone nuts” in some sectors.
“Technology is really an interesting one, they are having to pay huge amounts of money for people and they are losing staff to competitors,” Dare says.
“Benefits come on the agenda particularly when they are trying to negotiate. We’re seeing employers who are saying: ‘Come to us – we give you this, we give you that’ and actually benefits are becoming quite high up the agenda – even with graduates.
“I was talking to a prospect in the scientific arena and they were saying at graduate fairs now they’re seeing much more interest from graduates around what benefits they get, rather than ‘how much are you going to pay me?'”
Never seen so many new to market schemes
All this demand is manifesting itself in a massive growth of virgin business for advisers.
Karen Gittings, senior corporate benefits consultant at LEBC Group, who has worked in the sector across four decades, says since the pandemic she has never worked on so many new to market schemes.
“People are becoming more aware of the great value of group risk benefits,” she says.
“And I’m getting lots and lots of enquiries from companies that have never ever had group risk benefits before and I’ve placed lots and lots of new to market schemes in the past couple of years – more than ever in the whole of my career.”
But according to Aviva’s Ellis, employers are not just automatically renewing group risk benefits or introducing them for the first time, they are reviewing the offerings they have in place.
“We’re seeing greater demand for reviewing employee benefits, working in collaboration with advisers to identify what broader employee benefits may be useful for a client and where they may have any gaps in provision,” Ellis says.
“This is a key growth opportunity for us.”
No chance of IP auto-enrolment soon
Amid such high demand, what are the prospects of the protection sector emulating the pensions sector and introducing income protection auto-enrolment?
Roy McLoughlin, associate director at Cavendish Ware, does not think this will happen anytime soon.
“We don’t think a group risk auto-enrolment scheme will emerge in the near future,” McLoughlin says.
“What is important though is for government to talk openly and encourage the concept of employers exploring these benefits.
“It’s also extremely important for the industry to publicise the concepts themselves. There is very little done in terms of promotion of group benefits – to the SME community in particular.
“More liaison with small business groups and chambers of industry alongside far greater media coverage would surely bring these subjects into everyday consideration. Maybe the group industry could take a leaf out of the seven families campaign and run something similar. That was all about awareness after all.”
Ian Ranger, head of claims and medical underwriting, Canada Life group insurance, agrees – arguing the sector needs to face up to the challenge of presenting the case for insurance protection products to both employers and employees.
“Different reasons to engage with the insurer will be required to encourage interest in all generations to the importance of life, critical illness and income protection insurance, Ranger says.
“No doubt, the industry may wish for auto-enrolment but we’ll continue to focus efforts on why insurance protection products make sense for employers, especially in a highly competitive recruitment market where employees are considering the all round benefits on offer from a prospective employer.”
Employers know the true value
As for the immediate future, even with the prospect of recession this autumn, advisers are bullish about the group risk sector’s prospects.
“I believe we will continue to see a rise in enquiries from the group risk market over the rest of this year,” Charlie Cousins, founder of Hooray Health & Protection, tells Health & Protection.
“However, we need to be rallying the insurers together to start focusing on SME propositions that are actually targeted at them and produce results.
“Too often we see everyone else doing what they can to keep with the Joneses, stroking egos here and there, but real change is underway.”
And calling on her own experiences in the sector, Gittings is equally bullish about group risk’s prospects.
“I don’t think that group risk will suffer at all because I’ve worked through the last recession and every time you think people are going to cut the benefits and they’re going to be cancelling schemes they just don’t, because most people know the true value of group risk benefits. They really do value them and often they are the last things to go,” she concludes.