Group risk coverage rose in 2024 but the growth in people covered by the benefits “that punch above their weight” is slowing, according to the annual Swiss Re Group Watch report.
The number of people insured rose by half a million from 15.1 million in 2023 to 15.66 million in 2024 representing a 3.7 percent rise. Active group risk policies increased by 3.2 percent from 91,739 to 94,675.
Within this group of benefits, critical illness cover (CI) saw the biggest increase as the number of members insured rose by 4 percent in 2024. But this is a marked drop in growth compared to 2023 when CI members grew 9.6 percent.
The number of people insured by long-term disability income (LTDI) policies increased by 3.9 percent in 2024, which is another marked drop from growth of 6.6 percent in 2023.
The number of people insured under group death benefits increased by 3.6 percent in 2024, which is down from growth of 3.9 percent in 2023. Within these figures, membership of excepted group life policies grew by 9.3 percent, while registered group life membership increased by 2.1 percent.
Keith Williams, head of group risk UKI at Swiss Re and a joint-author of the Group Watch 2025 report, 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.”
It is notable that employers are more commonly insuring shorter benefit payment periods for group long-term disability (GLTDI), the report’s authors said.
Ron Wheatcroft, technical manager, L&H UKI at Swiss Re and fellow report author, 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.”
The report also found that market sentiment among employee benefit consultants (EBC) and product providers (PP) was slightly less positive than in previous years.
It said that many respondents pointed to the potential for national insurance increases to impact short-term growth.
Wheatcroft said: “In the context of group risk benefits, we received a wide range of views as to how employers might meet additional costs.”
Many EBC and PP respondents said they expected employers to be reluctant to cut back on group risk products and services. This is because of the positive messages group risk benefits send to employees as well as the impact on workplace wellness. However, other respondents were less optimistic. They noted the increasing cost of private medical insurance (PMI) and suggested it could lead to cutbacks on other benefits, particularly LTDI.
However, despite these sentiments, Wheatcroft said: “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.”
Katharine Moxham, spokesperson for Grid, said: “It’s great to see that over half a million more employees are benefitting from group risk benefits (employer-sponsored life assurance, income protection and critical illness), and are now protected from the financial devastation that death, accident, illness or disability can bring.
“The all-round growth during 2024 demonstrates that employers increasingly recognise the value of group risk, not only for giving financial protection to their people for the worst kind of life events, but also for the support services provided to both employers and employees.
“It’s particularly pleasing to see so many SMEs offering group risk benefits to their staff, with over 90 percent of group risk benefits offered for groups of less than 250 employees.
“With the challenges that employers have faced, including absorbing costs from additional NI, increasing PMI premiums and other financial pressures, our industry needs to work with them to ensure that group risk protection benefits stay front of mind. The benefits punch above their weight, and provide a raft of help and support for health and wellbeing, as well as financial protection.”
