12 April 2017 Insurance

UK group risk market grows strongly in 2016: Swiss Re

The number of people in the UK covered by group risk policies increased significantly in 2016, adding 520,000 newly covered members, according to Swiss Re's latest annual Group Watch report.

The total number of people covered by group schemes in the UK grew 4.5 percent in 2016 on the previous year to over 12 million.

Death benefits generated the highest contribution within group risk policies in 2016 with in-force premiums of £1.33 billion. In-force death benefit sums assured increased by 4.4 percent year-on-year. Within this, Excepted Group Life (non-pension) benefits saw annual growth of almost 30 percent.

Long-term disability income was £682 million in 2016. For the first time in more than ten years, there has been an increase to the number of insured policies (from 17 111 to 17 168). Total insured benefits increased by more than 9 percent and the number of people insured by over 130 000 (over 6 percent).

Critical Illness in-force premiums were £95 million at 2016-end. In-force sums assured were up 9 percent year-on-year and premiums by 11.5 percent.

"This year's results paint a very positive picture at a difficult time for the UK economy," says Ron Wheatcroft, technical manager at Swiss Re and author of the report.

"The stand-out figures in the data show the increase in Excepted Group Life cover and there are other good signals too, including a reverse in the decline of long-term disability income in-force policies.”

Despite the positive headline numbers, Group Watch 2017 calls for regulatory and legislative change to further enhance the market. It urges the UK government to reconsider its decision not to grant an exemption from new salary sacrifice restrictions affecting Excepted Group Life and Long-Term Disability Income policies. This move would encourage wider participation and remove the disincentive that employees suffer double taxation if they contribute towards their employer's Long-Term Disability Income policy. The report also calls on the UK government to exempt from taxation discretionary trusts where the sole trust asset is an Excepted Group Life policy (EGLP).

Wheatcroft added: "The growth in Excepted Group Life policies reaffirms the need for clarity across the whole market around these arrangements. An exemption, where the EGLP is the sole asset, would confirm these arrangements as an efficient and effective way for employers to provide life 2 a cover as the link between pension provision and death benefits becomes less direct."

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