Group income protection is often perceived as complicated and expensive. That has long been the view of individual income protection products and, on a group basis, employers are especially nervous about the long-term commitment of providing for employees who are off sick.
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The group income protection market is generally fairly static, due in part to the product’s image as costly and complicated.
A number of insurers now offer additional extras such as counselling services as standard with income protection schemes.
Many are doing so to help the product better meet employers’ needs, and get staff back to work as soon as possible.
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Insurance providers have done much to try to regenerate the group income protection market. In recent years, their offerings have developed hugely as insurers have begun to offer add-ons, such as employee assistance programmes (EAPs), helplines and occupational health services, which now come pretty much as standard.
UnumProvident’s Pay Direct product, for example, seeks to tackle employers’ concerns over long-term liability. Wojciech Dochan, head of commercial marketing at UnumProvident, says: "One of the problems with the traditional group income protection contract was that the employee had to remain on the payroll in order to receive the benefit. But if the claim is valid, and the employee and employer sever their relationship, we would continue making benefit payments and support the employee in retraining or going back to some sort of occupation."
Overall, insurers appear to be taking a positive view about the market and they are taking measures to attract new customers by offering what employers and employees need.
Colin Micklewright, manager income protection business development at Canada Life, explains: "Employers are looking at group income protection, not as just an employee benefit, but as an employer benefit in terms of getting people back to work and retaining quality staff. The onus is on the insurers to make the product more relevant to the marketplace and with these bolt-on services they do become more relevant. The market will see more innovation in the future."
But healthcare specialist intermediaries are not so enthusiastic about the standalone position of group income protection products, particularly where they are bought off-the-shelf from an insurer which is not best placed to advise employers on their particular needs.
Stephen Donovan, director of corporate development at Lorica Consulting, says: "Employers need to look at their wellness programmes. They need to make sure they are recruiting and maintaining fit, well people, and then have a very rapid and early intervention on anything to do with absence or on anyone who exhibits the key indicators of stress or musculo-skeletal problems. If they can get rapid intervention through private medical insurance and then vocational rehabilitation measures to get people back into work that itself is a good motivator for staff."
He adds that employers could provide full-blown occupational health programmes for around £20-£50 per employee, or an EAP for £20-£25 per head, compared with full-blown group income protection, which can cost £300-£400 a head.
Offering budget group income protection schemes with 52 week’s deferral and a limitation on the period of payout to three or five years, however, can help to reduce the cost.
By implementing early intervention measures employers may also get discounts on income protection premiums. "With the more enlightened insurers, if you do [offer] early intervention [products] you can get between a 5% and 10% discount," says Donovan.