Record year for group risk in 2021

Today sees the publication of Group Watch 2022, the latest in Swiss Re's annual publications analysing the UK group risk (life assurance, long-term disability income and critical illness) market.

?The Report shows that the number of in-force group risk policies increased by 4.1% from 81,055 in 2020 to 84,369 in 2021. Moreover, the number of people insured rose to 14,106,854 by the end of 2021 – a 5.9% rise that significantly outstrips the 1.1% growth the preceding year or, indeed, any other year since the first Group Watch Report was published in 2007.

This is an amazingly good result given that there was little economic certainty during 2021. The increased coverage was seen across all three policy lines (death benefits, long-term disability income and critical illness).

?·??????Death benefits: the number of in-force policies increased by 3.7% and the number of people insured by 6.3%.

·??????Long-term disability income (LTDI): the number of in-force policies increased by 4.3% and the number of people insured by 4.6%.

·??????Critical illness cover (CI): the number of in-force CI policies increased by 8.2% and the number of people insured increased by 5.9%

Within the death benefit data, membership of non-pension Excepted Group Life Policies increased by 42.2% and now stands at more than 2m people. Registered Group Life Policy membership increased by 0.9% to just over 8m people.?The trend towards Excepted Group Life Policies is expected to continue, partly a result of the impact on more members of the Pensions Lifetime Allowance being frozen until at least 2026.??

The increase in EGLPs and membership reinforces the need for an exemption from IHT entry, periodic and exit charges for all trusts holding pure protection policies as a sole asset. While there are many more individual policies written into trust, the risk of a charge is less predictable with an EGLP given the nature of group life policies whose membership can, in theory, vary on a daily basis.

The Report uses the findings from research conducted among product providers (17) and employee benefit consultants (20). Many EBCs referred positively to the greater usage of services, particularly employee assistance programmes (EAPs) and virtual GP services with employers showing keenness to promote these benefits and take more time to understand how they work, as well as their importance as part of a well-rounded benefits proposition rather than just an insurance policy.

As skills shortages put a premium on good quality employees, we might expect more employers to look closely at how these propositions can be a vital recruitment and retention tool as well as integral to employee wellbeing when the effect of long-COVID remains uncertain and there is always the possibility of further variants.

With this in mind, while the numbers are extremely positive, more needs to be done to support businesses large and small to access the market and adapt to the “new normal”.

All ideas on how this can be achieved are very welcome.