Swiss Re research: Group risk market shows signs of recovery

In-force sums assured have grown in excess of premiums across group death benefits, critical illness and long-term disability income benefits, according to the latest Group Watch from Swiss Re.

The report found that overall, in-force group risk premiums fell by 1.8% compared with 2009. However, the results indicate the beginning of a recovery following an overall fall in premiums in 2009 of 7.7%.

Group critical illness insurance in-force premiums have increased by 3.8% to £50.3 million from £48.4 million in 2009. In-force group critical illness schemes grew from 2,073 in 2009 to 2,209 in 2010, and the number of lives covered increase by 10.2% to 305,678 in 2010.

The report, which summarises the views of 44 industry figures representing providers and intermediaries, also found that critical illness premiums written on a flexible benefits basis increased by 12.2%; in addition, flex schemes made up 52.6% of total in-force group critical illness premiums.

The report found that in-force premiums for lump sum group death benefits were £772.6 million, an increase of 4.6% on 2009. In-force premiums for widow’s and dependants’ death in service pensions were £145,693,417, a drop of 8.2%.

The number of lives covered under group death benefits arrangements was 7,856,218, an increase of 476,900 (6.5%) on 2009. When the figures for the product providers reporting for the first time are removed, the number of lives covered increased by 3.3%.

Total in-force flexible benefit death benefits premiums at the end of 2010 were £54,957,024, amounting to 6%, up from 5.7% in 2009 of total in-force death benefits premiums.

At the end of 2010, in-force premiums for group long-term disability income totaled £517,317,817, a reduction of 8.9% from 2009. The number of lives covered under long-term disability income schemes was 1,792,038.

In-force long-term disability income premiums written in flexible benefits arrangements at the end of 2010 were £36,935,017, a drop of 3.1% and amounting to 7.1% of total in-force group long-term disability income premiums.

Ron Wheatcroft, technical manager at Swiss Re and co-author of the report, said: “The results reflect the very competitive marketplace with pressure on employer costs feeding through to greater competition for intermediaries and product providers.

“Despite a modest reduction, the number of schemes in force held up well. Survey respondents frequently pointed to the important role for group risk schemes in the move away from state provision to greater self-responsibility.”

Katharine Moxham, spokesperson for Group Risk Development (Grid), added: “It is most encouraging to see the results pointing to the beginning of a recovery compared with 2009.

“Although overall in-force group risk premiums have fallen very slightly compared with 2009, this reflects the highly competitive nature of this marketplace.

“In-force benefits have grown across all product lines and the number of schemes in force has held up well, indicating that employers and employees still highly value these benefits.

“It is also encouraging to see survey respondents’ confidence returning, with increasing conviction that the industry has a strong role to play in the move away from state provision to greater self-responsibility.”

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