UK group risk market shrugs off COVID concerns to register growth in 2020

The UK group risk market showed positive growth in 2020, demonstrating its resilience and versatility amid the global pandemic, according to Swiss Re’s annual Group Watch report.

The 2021 report reveals that the number of in-force group risk policies increased by 3.6 percent in 2020. The number of people covered overall grew by over 150,000, or 1.1 percent, to 13,317,249 by the end of 2020.

In 2019 growth was 1.3 percent, demonstrating that COVID had only a modest impact.

The number of in force critical illness policies increased by 7.5 percent, and in-force sums assured increased by 5.3 percent.

In force death benefit policies increased by 4.1 percent, and insured death benefits increased by 3.4 percent. In force long-term disability income (LTDI) policies increased by 0.9 percent, while LTDI benefits per annum increased by 6.4 percent to over £100 billion.

The report found that the average membership per LDTI policy was 155 in 2020, up from 146 in 2019, which is the largest annual increase for five years, with more than 90 percent of those in force covering smaller companies with 250 members or fewer.

Ron Wheatcroft, technical manager for life and health for the UK and Ireland at Swiss Re, and one of the joint-authors of Group Watch 2021, said: “Faced at first with widespread uncertainty and forced to adapt to a very different business environment, [the group risk market] responded with agility and was able to support even more employers, trustees and members than it did beforehand. To have achieved such growth in the context is no small feat.”

Swiss Re called for the UK government to encourage employers to provide for their workforces to ensure continued growth in the market. It also called for the removal of tax complexity around products, such as the freezing of the lifetime allowance announced in the Spring Budget, which could burden employee death benefits.

Wheatcroft said: “The freezing of the lifetime allowance up till 2026 has only exacerbated our existing concerns about the application of the relevant property trust rules to excepted group life policies, and will leave more employers whose death benefits are in registered group life policies needing to consider what action to take.”

Group Watch 2021 is based on market data analysis as well as the opinions of market experts, including 18 product providers and 20 employee benefits consultants.

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