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Surprising growth of Group Risk sends market reeling

Surprising growth of Group Risk sends market reeling

The Group Risk market is one that has gone through seismic change and unexpected growth.

In the second article of the series, Paul Avis, Marketing Director at Canada Life Group Insurance, explained just how big the Group Risk has become and revealed how you can utilise these benefits to enhance employee recruitment and retention.

So, what is the size of the sector?

“A 4.5% increase in employees covered in 2016 led to a 3.8% increase in premiums in 2016,” adds Avis, “which means that at the end of that year Group Risk insurers provided protection for 12,029,790 people and the industry turned over £2.106bn in premiums.

“As an industry, we are a massive success story, having already grown by an additional 821,000 employees from 2012 to 2015. Continuing this, in 2016 almost 520,000 more people gained the benefits of ourcover. That is amazing for a single year, so surely, we are the envy of every other financial services sector?”

But it’s not all easy sailing in the Group Risk industry – as Avis reveals a hidden issue that whilst threatening the success story does provide organisations with an opportunity.

“While employees covered and consequent premium increases show the market is valued by organisations, as it has been continually expanded by current policyholders, it is still under-penetrated by potential employer customers with only 72,841 insured schemes in the UK,” he tells us.

“Clearly the challenge for us is to expand the number of companies providing cover to their staff, but those that have these types of schemes can maximise their uniqueness by actively promoting them. With so few employers having these benefits, and some unwilling to communicate them to staff, organisations that have the cover and actively communicate their existence or those that adopt new policies will help these employers both retain and gain the best new employees . This is especially true where Group Income Protection and Group Critical Illness schemes are insured as so few organisations have them.”

The market is structured as follows:

Product

Schemes

Annual Change

Lives covered

Annual Change

Annual premiums (millions)

Annual Change

Group Life

52,362

+2.7%

9,204,405

+3.9

£1,329.9

+2.6%

Group Income Protection

17,168

0%

2,239,110

+6.3%

£681.8

+5.3%

Group Critical Illness

3,311

+8.1%

586,275

+7.3%

£94.9

+11.5%

 

The tables below show the average claim amount and main causes of claim across all Group Risk products:

Benefit

No. of claims

Value of claims paid

Average claim amount

% of new claims paid for 2016

Group Life

9,337

£1,067m

£114,239

99.7%

Group Income Protection*

14,499

£358.7m pa

£24,740 pa

84.6%

Group Critical Illness

1,089

£71.6m

£65,704

81.4%

Totals

24,925

1,497.3m

 

 

 

Benefit

Main cause of 
new claims

%

Second main cause of new claims

 

%

Group Life

Cancer

43%

Heart Disease

15%

Group Income Protection

Cancer

24%

Mental Illness

23%

Group Critical Illness

Cancer

68%

Heart Attack

9%

 


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