Growth within the UK group risk market slowed in 2024 against a challenging market backdrop, Swiss Re’s annual Group Watch report reveals. The report shows that the number of in-force group risk policies increased by 3.2% from 91,739 in 2023 to 94,675 in 2024. In addition, the number of people insured rose from 15,103,366 to 15,662,500, an increase of 3.7%.
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The growth breaks down as follows:
• Death benefits: the number of people insured under group death benefit policies increased by 3.6% (vs. 3.9% in 2023). Within these numbers, membership of Excepted Group Life Policies grew by 9.3%, while Registered Group Life Policy membership went up by 2.1%.
• Critical illness cover (CI): the number of members insured in critical illness schemes increased by 4% (vs. 9.6% in 2023). For voluntary and flex arrangements, growth sat at 5.3% (vs. 6.5% in 2023).
• Long-term disability income (LTDI): the number of people insured by LTDI policies increased by 3.9% (vs. 6.6% in 2023).
Keith Williams, Head of Group Risk UKI, at Swiss Re and one of the joint-authors of Group Watch 2025, said: “The fact that all product lines were up in 2024 is hugely encouraging. However, following a bumper 2023, growth is most definitely slowing. This is partly a consequence of lower inflation driving reduced salary and, therefore, benefit increases.”
One notable theme from the report is employers more commonly insuring shorter benefit payment periods for Group long-term disability (GLTDI).
Ron Wheatcroft, Technical Manager, L&H UKI, at Swiss Re and one of the joint-authors of Group Watch 2025, said: “The trend towards shorter maximum benefit payment periods gives major cause for concern, considering the potential impact on the welfare state if an employee is unable to return to work before the end of a policy’s payment period. Not only this, as maximum benefit durations get shorter, employees face challenges in contributing to their employer’s scheme due to double taxation of benefits and premiums on voluntary schemes paid through salary sacrifice.”
“With employer National Insurance (NI) and other costs going up, abolishing double taxation would go a long way to encouraging more LTDI benefit topping up by workers. In addition, it would be great to see tax charges being removed on all trusts where the sole asset is a pure protection policy. We estimate that the costs of administration for employers and trustees for Excepted Group Life policies are at least £4m plus additional legal costs. The tax generated is less than a quarter of that £4m.”
Group Watch 2025 draws not only on extensive market data, but also engagement with individuals at both Employee Benefit Consultants (EBCs) (25 people) and product providers (14). Overall sentiment was slightly less positive than in previous years, with many respondents noting the potential for National Insurance Contribution (NIC) increases to impact short-term growth.
“In the context of group risk benefits, we received a wide range of views as to how employers might meet additional costs,” Wheatcroft said.
“Many respondents expected employers to be reluctant to cut back on group risk products and services, given the positive messages they send to employees and the impact on workplace wellness. Others were less optimistic, noting the increasing cost of private medical insurance (PMI) and the fact this could lead to cutbacks on other benefits, particularly LTDI.”
Looking ahead, Wheatcroft has an optimistic outlook for the group risk market’s future.
He concluded: “The market questionnaire showed a positive reaction to the independent review conducted by Sir Charlie Mayfield. Despite the short-term challenges employers are facing and cuts in the Government’s welfare bill, a greater emphasis on supporting people who are sick or disabled to return to work will undoubtedly position the role of the employer and rehabilitation services at the forefront of solutions.”
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