Group risk experts have praised levels of market growth highlighted in the latest Swiss Re Group Watch report but warned that the industry must focus on improving group IP.
Katharine Moxham, spokesperson for Group Risk Development (GRiD) said: "It's really positive to see continued growth for the Group Risk industry which reflects the generally confident market sentiment over the last 2 years.
"Overall in-force group risk benefits have again increased across all three products - particularly for excepted group life and group critical illness - and almost 310,000 more people are protected through Group Risk arrangements against financial loss through illness, injury, death or disability.
"However, we still have a long way to go. No matter what salary is at stake, it's important everyone has a way to safeguard their family's financial stability as the unexpected death or disability of a breadwinner can often mean financial disaster for a family."
Group life growth
John Ritchie, chief executive of Ellipse said: The growth in new group life schemes is very promising indeed, in fact we actually expected more growth in the SME sector but the pause in the auto-enrolment roll out schedule for the 2015 election is likely to have had an effect.
"Growth minded advisers and insurers have also spent much of the last year preparing for what looks like a few very promising years to come as the roll out intensifies, so we expect volumes to pick up further in 2016 and 2017.
"Streamlined processes will be essential to access this segment, as will clear communication about the true cost of life cover as we know many overestimate it."
Ritchie said the rise in excepted schemes made it important for the industry to simplify trust arrangements.
He revealed that Ellipse will be launching an Excepted Life Trust in the coming weeks.
Employer challenges
Meanwhile, group risk figures also warned there were clear challenges in attracting new employers to the marketplace despite auto-enrolment driving some change.
Tim Stoves, interim managing director at Canada Life Group Insurance said: "There are 1.8m employers going through Automatic Enrolment. The good news is that there are an additional 1,525 new Registered Group Life schemes but with only 42,848 schemes this evidences what a significant market growth opportunity there is.
"A feature of the death benefit market is the additional 1,236 policies and 99,473 new employees that are covered under Excepted Group Life policies. The reduction in the Lifetime Allowance to £1m may drive the popularity of this type of scheme."
Group IP growth
Despite the relatively poor performance of group IP, Ritchie said he was confident that "interest will catch the wave of group life take-up amongst SMEs in the next few years."
He added: "Increasing numbers of limited term products and an appetite to remove the state benefit offset, will also help in simplifying the products available.
"The report acknowledges the need to emphasise the employer benefits through greater promotion of early intervention and rehabilitation services, to which we fundamentally agree and would indeed extend to absence management, for which employer processes are often weak.
"We know that employers choosing not to insure disability benefits, are effectively self-insuring the disability risk and advisers and insurers could be doing more to raise awareness of this."
Stoves added: "Looking at the group IP market we note that, despite an additional 27,644 employees being covered, 8 fewer employers are now in the market. In effect we are stuck at around 17,100 employers.
It seems the messages about the great services being offered by insurers, including day 1 absence referrals, second medical opinion, employee assistance programmes etc., are not getting across.
"The industry should align to ensure that these increasingly important benefits take front and centre of the health and wellbeing focus of many organisations. As State Disability Benefits get smaller and increasingly hard to obtain this is an issue which we should all be capitalising on."
Further reading
Swiss Re Group Watch: Excepted group life sum assured grew by 30.9%
