What does the Sergeant review mean for the group market? John Letizia believes it is a spur for growth.
Finally, pricing at group level would ensure affordability for both men and women alike as workplace policies will not be affected by gender-neutral pricing. The legislation allows providers to quote by the gender balance of the workforce as a whole.
• Accessibility
There is undoubtedly still significant work to do in raising awareness of IP among consumers. Even with government support and endorsement, many may not hear about simple IP. Equally, if they do, they still may not have the confidence or financial acumen to go looking for cover. Group policies could be one way to improve take-up of protection policies.
The ongoing introduction of auto-enrolment pension schemes is a useful parallel. Legislation has demonstrated that the workplace is a strong channel to raise awareness and take-up of financial services products, and the introduction of auto-enrolment has been a catalyst for businesses to re-evaluate their entire benefits packages.
Since a company pension is no longer a point of differentiation, many firms are undertaking a comprehensive review to ensure their benefits packages remain competitive, and consequently are considering introducing workplace IP schemes.
Finally, the ability to reach large numbers of employees through group policies would help to keep costs down for providers, helping to ensure that the simple IP products would be commercially attractive.
• Availability
Group IP products could allow far greater access to cover than individual policies. The vast majority of workplace policies will secure some level of protection for all employees, regardless of their medical history. The only requirement is that they are actively at work at the time of joining the employer scheme.
A key requirement of a new simple IP product is that the vast majority of individuals will be eligible to buy a policy; no matter how easy to understand it is, a product is of no use if it excludes significant numbers of applicants.
However, even with simplified medical underwriting – including ‘yes/no’ answers – in many cases people may not be able to secure cover in the individual market due to pre-existing conditions or previous history of ill health.
