Group critical illness is experiencing a positive period of steady growth. Fiona Murphy takes a closer look at the market.
Group critical illness has been thought of as the least popular of the three main group protection policies. However, it has been experiencing slow and steady growth in recent years.
Swiss Re's Group Watch for 2013 found that group CI experienced large growth of 12.8% in terms of the number of lives insured, with a corresponding premium growth of 12.7%.
Meanwhile, new figures from group risk trade body GRID revealed there were just 798 claims during 2013, with the value of claims paid at £49.9m and the average claim amount at £62,582.
GRID also published the industry's claim rate payout percentages for the first time. The group risk industry paid out 99.6% of claims on group life, 82% on group income protection and 81% on group CI.
Katharine Moxham, spokesperson for GRID, said of the latest results: "There's been an increase in claims paid across the market and that's consistent in the growth of the product we've seen over the past year. We've seen schemes increase the number of people covered and the number of benefits they have."
The message seems to be very much a case of slow and steady growth across the board. Steve Bridger, head of group risk at Aviva, said: "Some of it has been genuine growth in terms of premium income. If we go back four years, it's about a 45% increase. That's growth in terms of the number of new lives covered.
"Although it's still the third benefit in terms of the other group protection products [behind group income protection and group life], employees are starting to value it a lot more. In the event of a claim, the lump sum is paid directly to the employee, so they're starting to see it as being more personal and valuable."
What is driving this growth? For many industry commentators, the popularity of CI as a flexible benefit is the reason. Moxham said: "It's all very positive for group critical illness and this reflects the fact it is a popular flexible benefit provision.
Around 60% of people covered under group critical illness are covered under a flex scheme. There is a clear trend towards employees participating in these benefits and a role for employers to facilitate employees towards them. I think it's around the overall offering - providing something that is seen to be of value - and I think CI flex is very popular in terms of take-up rate."
Bridger adds: "I think at least two-thirds of the market is on flex, so they are making an elective or considered choice to have CI as part of their benefit package. It can either be voluntary and completely paid for by the employee or the employer can top it up as a core benefit. The perceived benefit, because you pay for it yourself, is higher."
