If you read nothing else, read this:

  • Critical illness is an easy benefit to understand and offers cost-effective cover in the event an employee suffers from a chronic condition, such as a heart attack or cancer.
  • Group critical illness is popular within flexible benefits schemes.
  • The number of people insured under group critical illness insurance increased by 12.8% in 2013 (Swiss Re Group watch report 2014).
  • 1.5 million people contribute towards critical illness cover through flex, a rise of 6.8% in 2013 (Swiss Re Group watch report 2014).
  • It is set to grow by 11% within flexible benefits plans this year (Employee Benefits/Towers Watson flexible benefits research 2014).

During the economic slowdown, the overall group risk benefits market stuttered somewhat, but the popularity of group critical illness (GCI) cover has risen, which may be due in part to such health statistics.

In 2013, for example, the number of people insured under GCI rose from 339,073 to 382,624, a rise of 12.8%, according to the Swiss Re Group watch 2014 report, published in April.

In comparison, death benefits increased by 2.2%, while group income protection grew by 3.8% year on year.

Paul Avis, marketing director ?at Canada Life Group Insurance, says: “Employees can see a far more immediate benefit from group critical illness. It’s so popular because everyone knows someone who has had a heart attack, suffered from cancer or had a stroke.”

Swiss Re’s aforementioned research also showed that the number of GCI schemes have increased gradually over the years, rising from 2,073 in 2009 up to 2,655 in 2013.

GCI is easy for employees to understand, and employers to put in place

Critical illness is also an easy benefit for employees to understand, offering valued cover should the worst happen.

For employers, GCI is easy to put in place. If the level of cover required is below about £250,000, there is no medical underwriting, making the policy easy to offer and administer. Also, if a claim is made, the payment is made directly to the employee rather than via their employer.

GCI is particularly popular as an option offered via flexible benefits schemes. Swiss Re’s Group watch 2014 report also highlights that the proportion of GCI cover taken up through flex schemes makes up the vast majority of the £67 million paid out in claims each year by critical illness cover: £41 million is paid out under flexible benefits.

In 2013, 1.5 million people contributed towards group risk insurance through flexible and voluntary benefit schemes, representing a 7.8% rise on 2012. Critical illness alone saw a rise of 6.7% of people contributing through flex.

But insurers and intermediaries stress that appropriate technology must be in place and can be key to unlocking the potential that exists. Ron Wheatcroft, technical manager at Swiss Re, says: “Over a period of several years, the numbers have continued to grow as a result of more employees having greater choice through flexible benefits packages. GCI fits nicely with these packages but we expect it to grow by another 105,000 [lives covered]. Improved technology and benefit platforms are likely to support that.”

Employee Benefits/Towers Watson flexible benefits research 2014, published in April, found that critical illness is set to grow by 11% within flexible benefits plans.

According to the survey, GCI is one of the most commonly offered benefits via flex, with 71% of the 176 respondents offering critical illness insurance for employees and 58% offering it to employees’ partners.

Katharine Moxham, spokesperson for industry body Group Risk Development (Grid), says: “It is still relatively new. It was only launched in the 1980s but it is the fastest-growing area of group risk and an increasingly popular part of flex packages. It is something that employees see real value in.”

Most respondents to the Swiss Re research were confident that the market would continue to grow as employees continue to adapt, or increase, their benefits to suit their own personal circumstances.

Critical illness growth aligned to flexible benefits plans

The continued growth and success of critical illness is clearly aligned to the popularity of online flexible benefit programmes, which is continuing to grow due to employees’ ability to select benefits anywhere and at any time. But the real value of GCI to employees lies in the knowledge that they have financial back-up in place should the worst happen.

David Williams, director of group protection at Friends Life, says: “Those that take GCI up via flex schemes also buy it for their partners. This is where people really start to see the value of it and this has heightened the increase in flex.

“But if employers are offering protection benefits like critical illness cover or income protection, they should be shouting from the rooftops about it. These are incredibly valuable benefits that can help employees feel more secure knowing that they have some financial back-up should the worst happen.”