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Swiss Re wants to raise appeal of group protection

The financial services industry must make group life, income protection and critical-illness cover more attractive to employers and employees, says Swiss Re.

In the firm’s Group Watch 2008 survey, Swiss Re Life and Health technical manager Ron Wheatcroft urges product providers and advisers to increase the appeal of group products to arrest or reverse the net decline in the number of schemes in force.

Swiss Re recorded a modest rise in UK group life, income protection and critical-illness insurance sales of 5.2 per cent, from £1.51bn in 2006 to £1.59bn in 2007.

In-force market premiums for life cover totalled £910.8bn in 2007, up by 5.5 per cent from 2006, while income protection premiums increased by 4.7 per cent to £641m last year.

Critical-illness business was £37.2m, up by 7 per cent from 2006.

Wheatcroft says that the industry needs to respond to opportunities presented by the Government’s incapacity benefit reforms which come into force in October. The Government is replacing incapacity benefit with employment and support allowance in a bid to get people back to work, and save an estimated £7bn.

He says: “This means adapting the design of income protection products, along with making it clear to employers how group risk can present affordable solutions for the ultimate benefit of employees.

“Welfare reform could grow the market but it would be ironic if the age discrimination rules were to result in scheme withdrawal and lesser benefit provision in the private sector.”

Swiss Re surveyed 35 advisers and providers, with 29 expecting the group life market to grow in 2008 and 2009 while six think that it will shrink.

For group income protection, 14 respondents expect the market to grow while 20 believe it will decrease and 24 respondents expect the critical-illness insurance market to increase over the next two years while nine think it will decrease.

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