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diet When looking at the group life market, stability more than dynamics is the word that comes to mind, and as a traditional part of an employee benefits package, it is not an area that often sees much radical development. However, after the introduction of stakeholder, the spotlight was thrown upon employee benefits and employers may have found themselves thinking in greater depth about offering more benefits to employees, group life cover being one of them. The UK group life market mainly consists of just a few big players. Various smaller companies have recently withdrawn from the market as a result of competition from the giants. In the fight to gain new business, companies are starting to think laterally. According to Nicola Smith, employee benefits communications manager at Swiss Life, more and more providers are looking at the wider picture, beyond the immediate financial protection afforded by group life cover. She says: “We want to look at services around the point of claim. For example, with income protection, we offer access to services for rehabilitating people and helping to get them back to work. With critical illness protection it’s about providing a care planning service for people who are critically ill, for instance offering a telephone helpline while you are part of the scheme. “Lastly, with our life cover, we can offer a service that helps people who are left behind after the death of either a husband, wife or a parent in the family. Here we linked up with Winston’s Wish, a charity that helps children come to terms with their bereavement.” Alasdair Buchanan, head of communications at Scottish Life believes that the way forward, particularly for IFAs, is through new clients. He says: “One of the things we would expect to see is IFAs and employee benefit consultants continuing to develop business, but this time with new clients. The potential comes from primarily small and medium-sized enterprises rather than large employers who will have understood their obligations and already taken steps to meet them.” However, despite the potential for the expansion of business, Peter Anderson, who leads the corporate market team at Royal & SunAlliance, admits: “One of the problems we’ve got with group life is that because of its approved status, there are very few things that you can actually do with it without compromising that special tax treatment. That’s why the more exciting parts of it tend to be group critical illness or income protection, which are not so encumbered by legislation and regulation from the Inland Revenue.” He adds that the only other area where there is room for movement is the unapproved market because since the introduction of the earnings cap, employers need to be conscious that their employment contracts should be aligned with the benefits provided by the scheme. Anderson warns: “Employers do need to be aware of the fact that the earnings cap exists, and that it applies to death in service benefits. They must check up and see whether their employment contract actually matches the liability that they are ensuring.” Experts agree that stakeholder has had some effect in highlighting employee benefits to employers who ordinarily would not have considered them, either because they did not recognise their advantages or through plain indifference. The impact of stakeholder has been greatest on employers who already run pension schemes, according to Buchanan, because they have already committed to the concept of group employee benefits, and will almost certainly have some sort of adviser, either an employee benefits adviser or an IFA, depending on the nature of the business. “The advisers would keep the employers informed of the implications of any legislative changes and what they need to do in order to comply with new legislation,” he says. Anderson asserts: “During the last year, stakeholder raised the profile of benefits across the board, not just pensions.” He claims that employers are split into three camps, the first being those who are already providing benefits but are looking to add an extra dimension. “I don’t think that these employers would generally be affected by the introduction of stakeholder because the quality of the benefits they are offering and the nature of the relationships with their staff are such that they are already operating good practice,” he explains. These employers would have welcomed stakeholder legislation because they were so far ahead of it that it didn’t have any impact on them. The other two groups comprise of those who have had to offer stakeholder, but believe that they cannot afford to offer more employee benefits, and lastly those that have used stakeholder to jump start them into into to doing something more serious. Smith also agrees that stakeholder has helped the process. She says: “Though we are not necessarily seeing employers champing at the bit to buy more benefits for their employees, stakeholder indicates the thin end of the wedge for employers to start getting to grips with their role as welfare providers. “In terms of employee benefits as a tool for recruiting and retaining, we are seeing more demand from employees for a comprehensive benefits package. Employees are not only asking about the benefits package before they go and work for someone, but are thinking twice before they leave their present employer, and weighing up the various costs involved.” There
is a positive outlook for the group life market as a staple of the
benefits package, and much of the responsibility currently remains
with providers to evolve the product, as Smith suggests: “I think
that the onus is very much on the suppliers and providers to come
up with things people want, and to come up with means of communication
to and accessing markets that maybe they haven’t accessed before,
and to look at new ways of providing benefits. “The defined benefit
pension is alas on its way out and we need to move with the times
and keep up with people’s needs for individual choice and flexibility.
This is all to do with our product development and the way we market
it.” However, she adds that the government also has a part to play
in terms of its vision about group life cover. “It depends on the
extent to which the government is honest with the population about
what it can and cannot provide, and what incentives it provides
for employers to purchase and promote benefits,” she explains.
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