Aegon quits UK's Group Risk market
In an economic downturn, there is an inevitable tendency for corporate moves to be perceived as a potential sign of a broader market shift. So it is perhaps not surprising that the recent announcement from Aegon Scottish Equitable of its intention to stop writing group risk business has turned the spotlight on the health of the wider UK group risk market. But we should guard against reading anything into a strategic decision by a specific provider.
Group Risk Development (GRiD) has represented the needs of the industry for more than 10 years and, in that time, has witnessed many periods of market volatility and similar withdrawals from the market over the years. From experience, it is natural for the challenging market conditions we are currently experiencing to act as a catalyst for some providers to review their presence in the market but they may create opportunities too. 2009, for example, has already seen Zurich Corporate Risk enter the market and other, potentially significant, providers are expected to follow suit, demonstrating that the market remains buoyant.
Further commentary on the underlying confidence in the market comes from Swiss Re’s Group Watch 2009 report into the latest trends in UK group risk business. The 2009 report records growth across all group risk premiums during 2008: “Across all three types of business, 2008 saw a growth in group risk premiums. Overall in-force premiums have risen by 3.1% to £1.64bn, compared with £1.59bn at the end of 2007.”
The report goes on to acknowledge that, while uncertainty remains over the exact impact of age discrimination regulations and the gloomy economic climate continues, growth is likely to remain tough for the industry in the short term. However, upbeat qualitative responses reveal that respondents appear committed to working together to raise the profile of group risk and its benefits to employers, end users and the media – key to putting us in the best possible position to confound negative market predictions and build for future growth.
This is echoed in GRiD’s experience. GRiD represents almost all offices currently writing UK group risk business as well as a growing number of intermediaries and has seen membership numbers rise steadily in recent years. Nationally, UK group risk business remains an extremely competitive market. In this environment, clients and intermediaries wishing to transfer their Aegon schemes to other providers can rest assured that they will be able to do so with minimal disruption while benefiting from extremely competitive pricing.
So, while it is always disappointing when a provider decides to exit the market, with many significant players left in the market and new entrants joining, group risk business remains in robust health with a compelling market proposition which is deeply relevant to current business needs.
Katharine Moxham is spokesperson for GRiD
