Group risk premiums up by 9.7% in 2012

Total paid group risk premiums in the UK rose by 9.7% in 2012, according to research by reinsurance provider Swiss Re Group.

The organisation’s Group watch 2013 report, which surveyed 43 organisations, revealed that there were some increases in rates, as well as in the overall numbers of lives and schemes covered.

The number of lives covered under widows’ and dependants’ death-in-service pensions fell by 3.1%, with a 2.5% decrease in the number of schemes.

The report largely attributes this to the low interest-rate environment, which has resulted in the provision of lump-sum cover becoming more attractive.

The research also found:

  • The effects of the introduction of pensions auto-enrolment are still to have an impact on the market.
  • The total cover provided by employer-sponsored death benefit arrangements topped £1 billion in 2012.
  • Group death benefit premiums increased by 9.8%, with excepted group life premiums, increasing by 14.8%.
  • Long-term disability and critical illness premiums also showed strong growth of 8.7% each for the year.

The research also found that further legislative changes will place a greater emphasis on high-quality advice for finding the most appropriate benefits packages for employers and their workforces.

For example, further reductions in the annual allowance and lifetime allowance from April 2014 may increase demand for non-pension-linked death benefits, accelerating a trend which is already being seen in the growth of excepted group life cover.

Ron Wheatcroft, technical manager at Swiss Re and author of the report (pictured), said: “The fact that all aspects of the market have grown despite rate increases is a pleasing result for the sector.

“It is also positive to see that a large number of survey respondents are upbeat on the growth prospects for other key factors, such as the number of lives covered.

“The figure of £1 billion in premiums for the group death benefits sector is a milestone for the industry.” 

Katharine Moxham, spokesperson for industry body Group Risk Development (Grid), added: “It’s fantastic to see that after three difficult years there are some really positive growth messages for the group risk industry coming out of the Group watch 2013 report.

“Overall in-force group risk premiums are up nearly 10% on 2011, the number of schemes in force has increased, sums insured have increased across all three products and 300,000 more people are covered against financial devastation from loss of income through illness, injury, death or disability.

“This is a really positive reflection of the hard work put in by the market to promote and deliver these highly valued employer-sponsored protection benefits to a greater proportion of the UK’s workforce.”