Some of you may recall a Canada Life article saying the gauntlet is thrown - on the back of pensions automatic enrolment (AE) we need to grow the group risk market in terms of employer schemes, as well as premiums and employees covered.
Not having had too many challenges since that atricle, let's see where we are so that I can do it all again.
In 2013, we saw a reduction in the number of insured schemes in the market, with Registered Group Life Assurance (GLA) schemes down by 969, to 40,813 and Death in Service Pension (DISP) schemes down by 327, to 2,877. Another bad year for Group Income Protection (GIP) too, down to 17,193 schemes.
Now I'm not surprised by the reduction in DISP schemes, with the move from defined benefit pension schemes to defined contribution schemes and the cost of a low interest environment, but how much of a worry is the reduction in GLA and GIP schemes?
We're just emerging from the longest recession for 100 years, which has no doubt placed a huge strain on industry; particularly in the smaller segment. That's probably where there have been scheme losses.
Whilst the number of lives covered has increased, supported by the industry view that the GLA market will grow on the back of AE, where are the new to market schemes?
And, what about GIP?
In theory, this benefit should be more aligned to AE, allowing the retention of employees in service, whilst they continue to contribute to their pensions and pay NICs (if these benefits are covered). This product needs something special to get it really moving and to grow with clear focus and determination from the entire industry.
Although we, as insurers, are doing well from AE, so far only the larger employers have been through AE. The medium and small employers will reach their staging dates over the next couple of years, so the acid test is this - will we get new to market employers and new GIP as well as GLA schemes?
Adviser consolidation continues and there are fewer intermediaries for us to work but we still need a robust and vibrant campaign of AE and group risk growth. We are just awaiting leaders in the intermediary community to be clear with us that this is one of their revenue and growth strategies.
Regrettably, I can count on two hands (and no thumbs) how many advisers have done this. Those that do want to grow employer GLA and GIP volumes on the back of pension AE know we are here and waiting to help. A record breaking year for our online SME system, CLASS, is already underway with those that have the foresight to act now...
P.S. On the other hand, Group Critical Illness is an exceptional good news story, with an additional 198 new employer schemes - still a very small market segment though, with only 2,655 schemes.
