Business Benefits @ Norwich Union
Type: Cafeteria-style group protection product which includes group income protection, group life cover, group private medical insurance and accident, sickness and unemployment protection for customers with Norwich Union group pensions.
GROUP INCOME PROTECTION
Minimum benefit/premium: 30 per cent of salary/£500 a year.
Minimum-maximum ages: 16-64.
Minimum group size: Three.
Deferred periods: Choice of 13, 26, 52 or 104 weeks.
Definition of disability: Own occupation, personal capability assessment may be applied.
Commission: Level 12 per cent.
Tel: 0870 9001022.
GROUP TERM ASSURANCE
Type: Level term assurance.
Minimum sum assured/premium: None.
Minimum-maximum term: 2-45 years.
Charges: Initial £348.
Commission: Level 1-4 per cent.
GROUP PRIVATE MEDICAL INSURANCE
Minimum-maximum ages: From birth-no maximum.
Minimum group size: 3.
Maximum benefit: No maximum.
Cover provided: In patient, day patient, outpatient, hospital charges, specialists fees, diagnostic tests, radiotherapy, chemotherapy, physiotherapy.
Commission: Up to 50 lives – initial 15 per cent, renewal 5 per cent, 51 lives and above – subject to negotiation.
Tel: 0845 3000649.
ASU PROTECTION PLAN
Maximum benefit: £3,600 a year.
Benefit payment term: 12 months.
Deferred period: 30 days.
Premium: Subject to negotiation.
Commission: £30 after two monthly premiums paid, £20 after 13 monthly premiums.
Tel: 01274 864866.
Range of cover 6.5
Premium rates 5.8
Company's reputation 8.0
Product literature 7.5
Norwich Union has introduced Business Benefits @ Norwich Union, a cafeteria-style group protection plan.
Looking at how the plan fits into the market, Humble says: “There is a growing market for group protection plans for small companies. This package is aimed at this market, particularly in the 30 to 50 employee sector, but it is also unusual in that it can cater for as few as 3 employees.”
Robinson says: “Benefit consultants have been crying out for tailor-made and bespoke benefit packages for years. The only effective way to deploy these services is using a composite package, which retains complete flexibility for the client, both at corporate and individual employee level.”
Dilke-Wing says: “There appears to be a growing trend among protection offices to issue all-encompassing benefits packages, and in this respect Norwich Union has opportunely rebranded what most of its constituent parts were doing before the CGNU merger.”
Searle says: “This is a useful marketing tool to encourage employers to provide a range of benefits.”
Looking at the cover available, Robinson says: “As Norwich Union's first attempt at a package, it is comprehensive and looks after the core benefits that most employers are seeking. It could, however, have included an insured widows pension benefit and spouse's extension for the group life cover.”
Dilke-Wing says: “The cover appears to be exactly what you would expect, with all the constituent parts, but why no group critical illness cover?”
Humble thinks that the plan meets the employee protection needs of most group schemes, while Searle says: “It offers comprehensive cover with the combination of protection plans on offer.”
Identifying the type of client that the plan is suitable for, Dilke-Wing says: “The package is suitable for two types of corporate client, the employer who currently provides nothing and wants to keep everything with one insurer, and the employer who wants to consolidate existing disparate arrangements.
Humble says: “This is for small companies that wish to provide protection for all employees, or any size of company which only wishes to provide benefits for small numbers of employees within defined categories.”
Robinson says: “The plan is most suitable for the small to medium size employer with up to 500 employees, who require a very flexible and modern benefits package where the employee has freedom of choice but at a reasonable choice. This enables them to compete on a level playing field with the larger employer, who may have much larger human resource facilities and more internal depth.
“It will particularly appeal to companies with a varied age profile, as the package can be made to appeal to young single employees without dependents, as well as catering for the more typical scenario of protecting families after the main breadwinner has died.”
Moving on to the main useful features of the plan, Searle says: “Should an employer express interest in one type of benefit, then all four can be suggested to offer a complete package from one provider.”
Humble says: “There is the low minimum numbers of members. Also there are discounts for more than one cover, which is particularly good for small employers as the policy fee can be waived for group life.”
Robinson says: “If all aspects of the plan are implemented an employer has a robust, comprehensive package which will lead to: employee satisfaction as the plan will appeal throughout the whole population profile, the ability for the employee to change the package as their lifestyle changes and one point of administration at the three levels of employer, adviser and product provider. Employee retention should also be improved as the employee contract becomes more competitive.”
However Dilke-Wing says: “It is difficult to find any strong points to the plan. I suppose that the brochures are quite nice, and centralising all benefits with one insurer may suit some clients.”
Assessing the drawbacks to the plan, Robinson says: “There are two disadvantages. There is no injured widows pension provision as part of the business benefits, and there is no spouses extension on group life cover.”
Humble says: “It isn't really a plan, just a wrapper for the four underlying plans which are fairly standard, except for Pension Guard. The latter is not a waiver of contribution benefit. It is just accident, sickness and unemployment, with unemployment cover being optional, and with benefits payable for a maximum of 12 months.”
Searle says: “This is actually four separate contracts requiring four individual proposals and therefore four policy documents. Norwich Union does not appear to offer group critical illness, as do some other companies. And lastly no discounts are given if more than one segment is selected.”
Dilke-Wing says: “The plan is boring and offers no group critical illness. There is a minimum of five people for group lives and there is also poor commission on the accident and sickness part.”
Evaluating Norwich Union's reputation in the market, Searle regards it as a well-known and respected conglomerate, while Humble says: “It is a very strong brand name, well recognised by clients and by their employees.”
Robinson says: “Like many industry heavyweights the typically positive public perception of Norwich Union often hides a rather inconsistent and sometimes worrying trend in administration and technical support. For the management of group schemes, where this package is intended, absolute attention to detail must be taken as the norm and not as the exception. Norwich union's general perception in this marketplace tends to be good – big tends to be beautiful.”
On whether the commission is fair and reasonable, Searle says: “Far from it! The commissions offered are most unattractive compared to separate plans offered elsewhere. If the package was all in one and the premiums were clearly very competitive and the cover wide, then it may be appropriate for an IFA to charge a fee to make up for the low commissions. But, how many IFAs will wish be become involved in registering with the General Insurance Standards Council (GISC) for a range of products which they will become involved in only rarely?”
Dilke-Wing says: “This is not detailed in the literature, but judging from the commission level on the ASU policy, I don't suppose that it is any better than the standard derisory levels that group protection schemes always pay.”
Commenting on the product literature, Searle thinks that this is smart looking, clear and concise, while Robinson regards it as very good, with general appeal to most employees.
Humble says: “It is OK for each product within the plan, but the literature which is meant to pull it all together into a package doesn't succeed in doing so.”
Summing up, Searle says: “Clearly it is important for an IFA to be able to offer these benefits as an addendum to the stakeholder scheme or group money purchase scheme or group money purchase pension plan. However, I am not convinced that this package of four separate plans from Norwich union would provide the best cover at the most competitive cost.
“Surely the plans could have been offered all together with one application form? But that cannot happen while we have the ridiculous situation where some products offered by IFAs are regulated investment products, others are non-regulated protection products and yet others are general insurance products coming under GISC regulations.”
Scott Robinson, Director group business, TBO Corporate Benefit Consultants, Mike Humble, Regional director, Heath Lambert Financial Services, Martin Dilke-Wing, Director, Morgans Independent Advisors, Gordon Searle, Director, Amor Searle.