The biggest challenge facing the protection industry is making group life, income protection and critical illness more attractive to employers and employees according to Swiss Re.
The reinsurer’s Group Watch 2008 report says increasing the appeal is essential in order to arrest or reverse the net decline in the number of group life and income protection schemes in force.
The report shows a modest rise in UK group life, income protection and critical illness of 5.2 per cent, from £1.51bn in 2006 to £1.59bn in 2007.
In force market premiums for life cover totaled £910.8bn in 2007 up 5.5 per cent from 2006 while income protection premiums increased by 4.7 per cent to £641m last year. Premiums for critical illness totaled £37.2m up 7 per cent compared with 2006.
Co-author of the report Ron Wheatcroft says providers and advisers need to respond to the opportunities presented by upcoming welfare reforms.
He says: “This means adapting the design of income protection products, along with making clear to employers how group risk can present affordable solutions for the ultimate benefit of employees. While welfare reform could grow the market, it would be ironic if the age discrimination rules were to result in scheme withdrawal and lesser benefit provision in the private sector.“