This provides a valuable safety net for employees at companies of all sizes but it is especially useful to small companies whose workforce might all know each other; where they have a “work family” whose employer takes a more paternal approach to looking after their employees, says Lee Lovett, managing director, group protection at AIG Life.
“If one of their work family colleagues is ill, for example, it can impact not just on the employee’s family but on how well the business might continue to function.”
The hurdles
Clearly the fear factor, mentioned at the start, represents one of the biggest hurdles. So how can this be overcome?
According to Knowles, the group market could benefit from taking a page from the individual market’s book in two main areas.
Firstly, training on group risk plans. “Whilst the benefits of the policies are the same, there are key differences and understanding these is vital.”
He says there are nuances with the products and options that you wouldn’t see in the individual protection market. There are also complications that can occur in relation to the lifetime allowance for registered group policies, which could be easily overlooked by an adviser who does not operate in the group risk market.
Secondly, claims statistics. “Individual advisers are used to having stats to hand for each insurer, but this is much less common in the group space,” he says.
However, annual statistics for the group risk industry as a whole are readily available. GRiD’s latest announcement revealed that the industry had paid out a “record” £1.76bn in claims in 2019, equivalent to £4.82m a day.
At the same time though, the group market has received some negative press for its declined claims figures, which are generally higher than they are in the individual market. This might be off-putting to some individual protection advisers, but the negativity perhaps shows a lack of understanding of how group risk works.
In the group market, early intervention is completely integral to the product. This is about insurers helping people get well and back to work and normal life.
After a claim is made, the individual usually has a 26-week deferred period, during which time early intervention support kicks in. If the employee returns to work before that deferred period is up – and in 70 per cent to 80 per cent of cases that is what happens with the big insurers – it is classed as a declined claim.
So, maybe it is time to get new terminology around this.
