General Insurance Article - Actual versus percieved cost is barrier to Income Protection

Research from GRiD shows that one of the main barriers to Group Income Protection (GIP) are actual and perceived costs

 .The research* was conducted among industry leaders at a healthcare and group risk forum and show:

 45% believe that perceived cost is the main barrier to larger corporates offering GIP
 62% say that it’s a mixture of actual and perceived costs that hold smaller employers back.

 The findings support GRiD’s employer research** which showed that, out of those employers who did not offer GIP, 26% thought it would be too expensive and 60% thought GIP would cost more than it does.

 Encouraging larger employers
 Delegates indicated that a mix of things were needed to encourage larger employers to offer GIP. Financial incentives came out as the most popular answer, with 29% citing this as a priority. Other ideas included helping employers to understand return on investment and how it can support absence management, better education & awareness and ‘borderline compulsion’.

 Encouraging smaller employers
 The focus to encourage smaller employers was very much on better education, awareness and simpler products, with 42% believing such things are needed to get SMEs on board. A further 31% said financial incentives would be necessary.

 Katharine Moxham, spokesperson for GRiD said: ‘When cost is put forward as an issue, what employers are really saying is they don’t understand the value. There will always be demands on budgets and what the findings show us is that we need to get better at making the business case for group risk financial protection (employer-sponsored life assurance, income protection and critical illness).’

 It is important that how the value is communicated is tailored for each audience. While some messages will be universally important for all audiences, it can be compelling for larger employers to specifically see how GIP can be a point of differentiation when it comes to recruitment, how it helps to fulfil their duty of care and obligations under the Equality Act, plus how it gives access to absence-management support.

 Smaller employers are less likely to have specialist reward managers and may need more help in understanding how GIP can support their business. The impact of having a member of staff absent can be felt more keenly and they may not be aware of the support that’s available for them within GIP.

 For all employers it is important to communicate the added-valued benefits that are offered alongside the core insurance which can include preventative support, stress management, fast-track access to counselling and legal helplines. Many of the added-value benefits are often available to the entire workforce and not just the insured population. When group income protection is used as it is intended, it can be accessed every day if needed, even if a claim is never made.

 Katharine Moxham adds: ‘The value is there to be had and it is important that it is communicated. We need to move the conversation on from cost and talk about value. Employers that make use of group income protection can’t sing its praises highly enough, and the findings show us that as an industry we need to do more to talk about the great value that group risk financial protection provides.’

 The DWP/DH Improving Lives Work, Health and Disability Green Paper*** recognises the role that group income protection can play in supporting employers' health, wellness and attendance programmes.

 Katharine Moxham concludes: ‘Group income protection enables employers to take a more proactive approach to the health, wellbeing and financial resilience of their employees. Both Government and the industry have a role to play in raising awareness of the need to protect income against the consequences of prolonged illness or disability and the importance of the workplace in particular in helping to achieve this. We recognise the difficulties faced by SMEs and would be happy to work with Government on initiatives to grow awareness amongst them.

 ‘As the group risk industry body, GRiD will be responding to the consultation but it’s important that advisers and employers make their own views known too as weight is given to the number of responses making the same or similar points.’

 Reponses can be made up to and including 17 February 2017 by clicking here


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