Group CI has seen steady growth in the past year or so, but why? Nicola Culley investigates and assesses whether the increase is sustainable.
But elsewhere in the industry, Canada Life has reported significant growth in new business group CI sales this year.
Paul Avis, sales and marketing director at Canada Life, echoed Bridger’s views that auto-enrolment is not driving growth yet, but that its encouragement of flex systems integration is definitely an opportunity for the market.
He added that premiums have also reduced notably since 2007, which made the schemes more attractive from an employer’s cost point of view.
Avis said: “Since 2007, group CI is the only benefit to have had a continued growth rate. But it is still a small market comparably. About 60% of group CI schemes are bought through flex platforms.
“The rates have gone down. The premiums per benefit in 2007 were much higher than 2012; approximately £1.56 versus 99p now. As the market has grown, the premiums have reduced significantly by about 37%.
“Insurers expenses have gone down now that we have a big enough book of business that has enabled us to reduce cost. It will become more and more attractive to employers and another opportunity to grow.”
According to Avis, there is also a changing need in the UK in relation to group CI. He made the point that as there are currently now more single than married people, group CI is a more attractive benefit.
He said the only concerns are around education, or lack of it. Avis added that insurers do not have access to individual employees in the group market.
“We do have concerns that in the group market we do not have the opportunity to educate the individual employees, so we are addressing ways to [increase] acceptance rates and prevent claims for things like chesty coughs,” he explained.
But, overall, Avis summarises that the story for group CI is a positive one that will continue to grow. And advisers seem to feel the same. Elliott Silk, head of employee benefits at advice firm English Mutual, said the market is moving quicker in terms of developing flex systems and of group CI take-up.
Despite noting that flex systems have long been touted as the next big thing that perhaps had not developed as much as they could have, Silk says that of late there has been significant development in systems for small companies.
He said: “We are seeing a lot of development in small company flex systems with much lower costs and auto-enrolment has been a driver of that. The market has realised that SMEs will need more affordable systems to tackle auto-enrolment.
“Take-up of group CI will follow: we are certainly seeing it being discussed more with clients. Adviser share the opportunity with auto-enrolment to deal with clients for the first time.”
English Mutual operates very much from a consultancy base, as opposed to a one-dimensional intermediary one. The firm’s proposition offers a full menu of prices and options from which clients can build different packages, including group CI, to bring the full health and wellbeing picture together.
Silk said: “It is about the bigger picture. So for employers, they are looking at fixed costs with auto-enrolment, because it is mandatory legislation. And it is about the adviser talking about other positive messages that employers can put out to employees, such as added benefits.
“Some are always going say they do not want added cost, but others will like the sound of group CI. I personally believe group CI will continue to grow. It will be more than a trickle every year, but I am not sure there will be any mad rushes for it either.”
Silk added that advisers are very good at stealing business from each other, but not so good at bringing new virgin business in. He said: “In terms of group CI, there is a massive opportunity out there for advisers given the majority of employers do not have it. They should be looking to take advantage of that and not just look at the business that exists already.”
Nevertheless, most agree the news story for group CI is a good one. With reports from insurers of significant new-to-market schemes, and an increase in adviser-client conversations about the benefit, growth looks set to continue for the foreseeable future.
