A fresh approach is needed to generate growth in the group risk market and tackle the challenge of impending legislative changes, according to Jelf Group.
The employee benefits consultant believes well publicised proposals to remove the default retirement age will have a detrimental effect on pricing and urges providers to focus on simple and effective delivery of their promises.
It suggests improved use of technology will be crucial but that this must be supported by education about the long-term value of products.
However, it did identify the positive momentum that welfare reform could offer as the burden of incapacity benefits is pushed towards private provision, in the form of group income protection.
Chris Ford, director of group risk at Jelf Employee Benefits feels it has been a tough year for group risk with both market and economic forces creating unhealthy competition in the sector.
"On one hand, reduced rates and relaxed underwriting practices could be seen as a positive, but as vital protection benefits continue to be underused, it seems that the price-led frenzy is not good for longevity," he said.
"New players have struggled to get established, written premiums have reduced and Bupa Health Assurance announced plans to withdraw from the market. Of further concern is that the underlying value of these benefits is being eroded, making it all too easy for employers to reduce or remove them.
"Challenges can quickly become great opportunities in the group risk market as they provide the chance to engage. As UK plc remains under-insured, the industry will need to promote the importance of these benefits, which may mean an honest look at existing practices," he added.
